Profit Margin Calculator

Pricing products with margin and markup

Margin and markup both describe profit, but they measure it against different numbers, and confusing the two is one of the most common pricing mistakes in small businesses. Markup compares profit with your cost. Margin compares profit with the selling price. If an item costs ₹70 and you sell it for ₹100, the profit is ₹30, which is a 42.9% markup but only a 30% margin.

This matters when you set targets. A shop owner who wants a 30% margin but adds 30% to cost will end up with a margin of only about 23%. Over a year of sales, that gap can wipe out much of the expected profit. Enter your cost and price here, or your cost and target margin, and the calculator shows both figures so you can price with confidence.

Keep GST out of the calculation. GST collected from customers is passed on to the government, so it is not part of your revenue or your profit. Work with prices before tax, then add GST on top when you prepare the invoice. Also remember that the margin shown here is your gross margin on each item. Rent, salaries, delivery, marketing and payment gateway fees still have to come out of it, so a healthy gross margin is necessary but not sufficient. Comparing your margins across products often reveals a few items that sell well but earn very little, which is useful when deciding what to promote and what to reprice. Reviewing margins every few months, especially after a supplier changes prices, keeps your pricing in line with your real costs.