Include the costs you can identify
Include direct materials, purchase costs, direct labour, packaging, transaction fees and delivery costs where applicable. Avoid pricing from supplier cost alone if it omits costs needed to fulfil the sale.
Free business pricing tool · No sign-up required
Profit Margin and Markup Calculator
Help your business price products and services with confidence. Calculate selling prices, fully allocated costs, gross profit, gross margin and markup. Add overhead, discounts and an estimated tax rate, then download or print your results.
Free calculatorKES and 12 currenciesInstant resultsCSV exportPrint / save PDFMobile friendly
Interactive pricing calculator
Calculate your selling price
Change any input to update your results instantly.
1. Choose your pricing method
Calculation assumptions
- Overhead is spread evenly over the entered quantity.
- Discount reduces the selling price before revenue and gross profit are calculated.
- Tax is estimated separately and is not counted as business revenue or profit.
2. Your pricing results
Profit snapshot
Selling price / unit
Ksh 1,428.57
Gross profit / unit
Ksh 428.57
Gross margin
30.00%
Profit ÷ revenue
Markup
42.86%
Profit ÷ cost
Total revenue
Ksh 1,428.57
Total gross profit
Ksh 428.57
- Fully allocated cost / unit
- Ksh 1,000.00
- Discounted price / unit
- Ksh 1,428.57
- Total cost
- Ksh 1,000.00
- Estimated tax (separate)
- Ksh 0.00
- Break-even units against overhead
- 0
Results are estimates based on the information entered. They are not a substitute for accounting, tax or financial advice.
Margin formula
Gross profit ÷ selling price × 100
((Price − Cost) / Price) × 100
Markup formula
Gross profit ÷ cost × 100
((Price − Cost) / Cost) × 100
Target price formula
Cost ÷ (1 − target margin)
Cost / (1 − Margin %)
How to calculate profit margin and markup
A pricing decision affects cash flow, competitiveness and the money available to run your business. This free profit margin calculator helps small business owners, retailers, wholesalers, freelancers, consultants and service providers understand how cost and selling price relate. Enter your figures above to calculate a target selling price or analyse a price you already have.
What is gross profit?
Gross profit is the amount remaining after subtracting direct costs from sales revenue. Direct costs can include inventory purchase price, raw materials, production labour, packaging and subcontracted work directly associated with delivering the product or service. Gross profit is an amount of money, not a percentage.
What is gross profit margin?
Gross profit margin expresses gross profit as a percentage of revenue. It tells you how much of each unit of sales revenue remains after direct costs. The formula is gross profit divided by selling price, multiplied by 100. If an item sells for KES 1,500 and costs KES 900, gross profit is KES 600 and gross margin is 40%.
What is markup?
Markup expresses profit as a percentage of cost. With the same KES 900 cost and KES 1,500 selling price, the KES 600 profit represents a 66.67% markup. Markup and margin describe the same profit using different denominators, so their percentages are not interchangeable.
| Example | Unit cost | Selling price | Gross profit | Margin | Markup |
|---|---|---|---|---|---|
| Retail product | KES 800 | KES 1,200 | KES 400 | 33.33% | 50% |
| Wholesale item | KES 2,000 | KES 2,500 | KES 500 | 20% | 25% |
| Professional service | KES 3,000 | KES 5,000 | KES 2,000 | 40% | 66.67% |
Margin vs markup: the key difference
Margin uses selling price as its base; markup uses cost as its base. For example, a 25% markup does not mean a 25% margin. If cost is KES 1,000, a 25% markup produces a KES 1,250 selling price. The profit is KES 250, which is 20% of the KES 1,250 selling price. To achieve a 25% margin on the same cost, the price must be KES 1,333.33.
How to use this selling price calculator
- Choose target margin, markup or known selling price.
- Enter the direct cost for one product or service unit.
- Enter the number of units and any total overhead to allocate.
- Set a discount if you want to see the effect of a promotion.
- Optionally enter an estimated tax rate to display tax separately.
- Review the selling price, gross profit, margin and markup, then export CSV or print to PDF.
Pricing tips for small business owners
Allocate overhead thoughtfully
Rent, utilities, software, insurance and administration may need to be allocated across products or jobs. Choose a consistent allocation basis such as units, labour hours or project hours.
Check competitor context
Use market prices as context, not as proof that your own price is profitable. Compare product quality, service level, delivery terms, customer segment and the actual costs behind each offer.
Test discounts before publishing
A discount reduces revenue and can reduce margin quickly. Model promotional prices before offering them, and confirm that the resulting contribution covers relevant costs.
Separate gross profit from net profit
Gross margin does not include every operating expense. Review rent, salaries, financing costs, tax and other overhead when assessing the overall profitability of the business.
Review prices regularly
Supplier prices, exchange rates, wages, shipping costs and customer demand change. Revisit cost assumptions when inputs change and keep a record of approved price lists.
Frequently asked questions
What is a profit margin calculator?
A profit margin calculator works out the percentage of revenue left as profit after subtracting the cost of the goods or services sold. Gross margin is gross profit divided by selling revenue, multiplied by 100.
How do I calculate gross profit margin?
Subtract the cost of goods sold from the selling price to find gross profit. Divide gross profit by the selling price and multiply by 100. For example, a KES 1,500 sale with KES 900 direct cost produces KES 600 gross profit and a 40% gross margin.
What is the difference between margin and markup?
Margin measures profit as a percentage of selling revenue. Markup measures profit as a percentage of cost. A 50% markup on KES 1,000 cost creates a KES 1,500 price and a 33.33% margin; a 50% margin requires a KES 2,000 price.
How do I price a product for a target profit margin?
Divide the fully allocated unit cost by one minus the target margin expressed as a decimal. For a 30% target margin, divide cost by 0.70. The target margin must be below 100%.
Does this calculator include overhead?
Yes. Enter total overhead for the batch and quantity. The calculator allocates overhead evenly across the quantity and adds it to the unit cost. For more accurate pricing, allocate overhead using a method appropriate to your business.
Can I include discounts and tax?
Yes. Discount is applied to the calculated selling price before revenue and profit are calculated. Tax is shown separately as an estimate and is not treated as revenue or profit. Confirm the correct tax base and treatment for your jurisdiction.
What is a good profit margin?
There is no universal good margin. Appropriate margins vary by industry, business model, product mix, operating costs, competition, inventory risk and customer expectations. Compare like-for-like businesses and assess net profit as well as gross margin.
Is gross margin the same as net profit margin?
No. Gross margin generally deducts direct costs of goods or services sold. Net profit margin also accounts for operating expenses, interest, tax and other applicable costs. This calculator estimates gross profit, not audited net income.
Can I use this tool for services?
Yes. Treat labour, materials, subcontractors and other direct delivery costs as unit cost. Allocate relevant overhead to the project or service quantity to get a more complete pricing estimate.
Can I download or print my calculation?
Use the print or save-as-PDF action to create a shareable record from your browser. The CSV download exports the current inputs and calculated results for use in a spreadsheet.
Does the calculator save my data?
No account is required. Calculation happens in your browser. The tool does not need customer names, payment details or confidential business records to calculate pricing.
Can this calculator guarantee profitability?
No. It is a planning aid based on the figures you enter. Actual results depend on sales volume, waste, returns, pricing changes, operating expenses, tax treatment and other business factors.