Margin and markup calculator
They are not the same number, and mixing them up is how a business prices itself into losing money on every sale. This shows both.
Work backwards from a margin you want
Margin and markup are not the same
This is the bit that costs people money.
Margin is profit as a share of the price. Markup is profit as a share of the cost. Buy at £10 and sell at £20 and you have a 100% markup - but only a 50% margin.
Someone told to hit "50%" who applies it as a markup instead of a margin charges £15 rather than £20, and quietly loses a third of the profit on every single sale.
Questions
Should postage go in the cost or come off the price?
If you pay it, it reduces your profit either way - what matters is that it is in there somewhere. Charging postage separately means entering what you actually pay, not what you charge.
What margin should I be aiming for?
It varies enormously by trade, so anyone giving you one number is guessing. The useful exercise is knowing your real figure per product - most people are surprised which lines are carrying the business and which are barely paying for themselves.
Does this include VAT?
No. Enter figures excluding VAT. If you are VAT registered, VAT is not your money and should not be in a profit calculation.
Know this for every product, not one at a time
StockRoom keeps cost and selling price separately against every item, so margin is a number you can see rather than one you work out on the back of an envelope.
Try StockRoom freeFree up to 50 products. £24/month after that.