Profit margin and markup calculator
Margin is profit as a share of the selling price; markup is profit as a share of cost. A product costing AED 700 and selling for AED 1,000 (before VAT) has a 30% margin and a 42.9% markup. To hit a target margin, price = cost ÷ (1 − margin). Add 5% VAT on top for the customer price.
Reviewed by Countify's ACCA/FCCA chartered certified accountants · Updated
- Price before VAT
- AED 1,000.00
- Gross profit
- AED 300.00
- Margin (profit ÷ price)
- 30%
- Markup (profit ÷ cost)
- 42.86%
- Price including 5% VAT
- AED 1,050.00
Results are estimates for general information, not tailored advice.
Margin vs markup on a AED 700 cost
Prices before VAT.
| Price | Margin (profit ÷ price) | Markup (profit ÷ cost) |
|---|---|---|
| AED 875 | 20% | 25% |
| AED 1,000 | 30% | 42.86% |
| AED 1,050 | 33.33% | 50% |
| AED 1,400 | 50% | 100% |
A 50% markup is only a 33% margin; confusing the two is a common pricing error.
Margin, markup and VAT
Work out margins on prices before VAT; the 5% VAT you collect belongs to the FTA. If you quote VAT-inclusive prices to consumers, divide by 1.05 first, or use the VAT calculator.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by price; markup divides profit by cost. A 50% markup equals a 33.3% margin.
Bookkeeping and management accounts
Monthly bookkeeping in Xero, Zoho Books or QuickBooks with management accounts you can run the business on, for a fixed fee.