Enter your cost price and selling price. The calculator gives profit margin %, markup %, and profit amount instantly. Switch tabs to calculate markup or reverse-engineer the selling price from a target margin.
Margin vs markup, the number that trips everyone up
My friend Arjun runs a small electronics shop in Coimbatore. He buys a Bluetooth speaker for ₹800 and sells it for ₹1,200. He tells customers “I make 50% profit.” He’s quoting the markup. His actual margin is 33.3%.
This distinction matters when you’re pricing products or comparing to industry benchmarks. Most industries quote margins, not markup.
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. Same rupee profit, different percentages. The formula:
Margin % = (Sell – Cost) ÷ Sell × 100
Markup % = (Sell – Cost) ÷ Cost × 100
A 100% markup means you doubled your cost. The margin on that? 50%. Never the same number (unless profit is zero).
Typical margins by business type in India
Margins vary enormously. Comparing your business to the wrong benchmark is useless.
| Business type | Gross margin range |
|---|---|
| Retail grocery / kirana | 8–15% |
| Garments / apparel retail | 40–60% |
| Restaurant / food service | 60–70% (on food cost) |
| Electronics retail | 5–12% |
| Pharma retail | 18–25% |
| SaaS / software | 70–85% |
| Freelance services | 60–80% |
| Manufacturing (FMCG) | 35–55% |
Low margin is not the same as low profit. A kirana doing ₹10 lakh/month at 10% margin earns ₹1 lakh. A boutique doing ₹1 lakh/month at 60% margin earns ₹60,000.
GST and your selling price
This is where Indian sellers constantly get confused. GST is collected on the selling price and passed to the government. It is not your revenue.
If you price a product at ₹1,000 with 18% GST:
- Customer pays ₹1,180
- You receive ₹1,000 (net of GST)
- Your margin calculation should use ₹1,000 as the selling price, not ₹1,180
If you set prices inclusive of GST and forget to back-calculate, your actual margin is lower than you think. A product “sold at ₹1,180” with ₹800 cost is not a 47.4% margin, it’s 21.2% after removing GST.
Use the GST Calculator to separate the tax component before running margin calculations.
Finding the right selling price
The reverse tab on this calculator answers: “I want a 40% margin. My cost is ₹600. What should I charge?”
The formula: Selling price = Cost ÷ (1 – Margin %)
So: ₹600 ÷ (1 – 0.40) = ₹600 ÷ 0.60 = ₹1,000
Common mistake: people add 40% on top of cost (markup method), getting ₹840. That gives 28.6% margin, not 40%. The division method is the correct one for margin-based pricing.
Break-even and margin together
Margin tells you profitability per unit. Break-even tells you how many units to cover fixed costs. Both matter.
If your fixed monthly costs are ₹50,000 and margin per unit is ₹200 (selling ₹500, cost ₹300):
- Break-even = ₹50,000 ÷ ₹200 = 250 units/month
- Below 250 units you lose money regardless of what the margin % looks like
The margin calculator handles per-unit math. For EMI on business loans or capital, check the EMI Calculator.
Related calculators
- GST Calculator - add or remove GST from your selling price
- Discount Calculator - calculate sale price after discount
- Percentage Calculator - general % calculations
Sources
- Gross margin formula: (Revenue − COGS) / Revenue × 100 — standard accounting definition per ICAI (Institute of Chartered Accountants of India) financial reporting conventions
- Markup formula: (Selling Price − Cost) / Cost × 100 — standard business math
- GST Council notifications — GST is applied on transaction value (selling price), not cost price, per CGST Act 2017, Section 15