Finance & Tax
Profit Margin Calculator
Calculate profit margin and the selling price that reaches it
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- Calculated in your browser
Calculation mode
Profit per unit
Profit margin
Markup
Margin is profit ÷ price · Markup is profit ÷ cost — same profit, different denominators.
How does it work?
Profit margin is the percentage of revenue that becomes profit after deducting cost. It is the single most important pricing metric for any retail or wholesale business — it tells you how much of every riyal you collect is actually yours.
Margin is NOT markup
Margin and markup describe the same profit from two different angles. Margin is profit divided by the selling price; markup is profit divided by cost. The same product can have a 50% markup but only a 33.33% margin — and confusing the two is one of the most common pricing mistakes shop owners make.
Margin % = (Price − Cost) / Price × 100 | Markup % = (Price − Cost) / Cost × 100
Three calculation modes
- Find margin: enter cost and price, get the margin and markup percentages.
- Find price: enter cost and your target margin, get the exact price to charge.
- Find cost: enter price and target margin, get the maximum cost you can pay for the item.
Worked example
- Cost per unit: 80 SAR
- Selling price: 100 SAR
- Profit per unit: 100 − 80 = 20 SAR
- Margin: 20 / 100 × 100 = 20%
- Markup: 20 / 80 × 100 = 25%
Practical pricing tips
- Decide your target margin before you set the price — not after.
- Account for VAT, shipping, and payment-gateway fees in your cost figure.
- A 100% margin is mathematically impossible (price would be infinite); aim realistically.
- Compare margins across SKUs to spot under-priced products.
Frequently Asked Questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. A 50% markup equals a 33.33% margin on the same item.
Which metric should I use for pricing?
Margin is more useful for profitability analysis because it shows how much of every riyal you keep. Markup is useful when you price items by adding a fixed percentage on top of cost.
Can the margin be more than 100%?
No — by definition margin is bounded at 100% (the price would have to be infinite). Markup, on the other hand, can exceed 100% (e.g. a 5× markup is 500%).
Does this calculator include VAT?
Enter VAT-inclusive prices or VAT-exclusive prices consistently on both sides. The calculator works with whatever you give it — but be consistent.
How do I price a product if I want a specific profit per unit?
Use 'Find price' mode: enter your cost and a target margin that yields the profit you want, and the price falls out automatically.
Why is my markup higher than my margin?
Markup is calculated on a smaller base (cost), while margin is calculated on a larger base (price). So the same profit yields a higher percentage when divided by the smaller number.
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