Margin formula
Margin (%) = (selling price − unit cost) ÷ selling price × 100.
At a EUR 100 price and EUR 70 unit cost, gross profit is EUR 30 and margin is 30%.
FREE TOOLS
Margin and markup calculator.
Calculate gross margin, markup and the impact of a discount on gross profit. A free calculator, Excel template and commercial audit preparation guides.
01 / Margin and markup
Margin and markup
Enter your selling price and unit cost. See the gross profit on each sale and the effect of a discount.
An example is shown. Enter your own amounts excluding VAT.
Price per unit before discount, excluding VAT.
Purchase or manufacturing cost, including allocated inbound freight.
0–100 %
Units of the same product over your chosen period.
What price meets your target margin?
0–99.99%
Minimum price for the target margin
Rounded up to the nearest cent to preserve the selected margin.
Formulas and assumptions
Margin = (price − unit cost) ÷ price.
Markup = (price − unit cost) ÷ unit cost.
Required volume increase = original gross profit per unit ÷ discounted gross profit per unit − 1.
This shows gross profit, not company net profit. Sales commissions, outbound delivery, fixed costs and taxes are excluded. If higher volume changes unit cost or requires additional capacity, assess those effects separately.
The discounted price is rounded to cents. Required units are rounded up.
Margin and markup definitions ↗XLSX · fill in separately · no registration
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Before discount
Margin
- Gross profit / unit
- Markup
Markup is undefined when cost is zero. A target price cannot be determined from the selected margin in this case.
What changes with a discount?
- Discounted price
- Gross profit / unit
- Margin after discount
- Gross profit change / unit
Required volume increase
To preserve total gross profit, assuming unit cost stays the same.
Minimum units for the same total gross profit units
50 additional units
FORMULAS AND EXAMPLES
How are margin and markup calculated?
Margin and markup compare the same gross profit with different bases. This calculator models sales of one product, not a company’s net profit.
Markup formula
Markup (%) = (selling price − unit cost) ÷ unit cost × 100.
In the same example, markup is 42.86%. Markup is undefined when unit cost is zero.
Price for a target margin
Selling price = unit cost ÷ (1 − target margin (%) ÷ 100).
At a EUR 70 unit cost and a 30% target margin, the required price is EUR 100. The price is rounded up to cents.
Use the selling price and unit cost of the same product, excluding VAT. Results show gross profit: sales commissions, outbound delivery, fixed costs and taxes are excluded. Discount impact assumes an unchanged unit cost.
02 / Before an audit
Prepare for a commercial audit
A clear list of useful data. You do not need to collect everything before the first conversation.
The last 12 completed months are a useful starting point. Use the same period, currency and amounts excluding VAT across all reports. The exact period and data breakdowns are agreed individually.
Download the preparation checklistPDF · 2 pages · no registration
This checklist supports preparation. Audit scope and expected deliverables are discussed separately. Priorities reflect profit impact, urgency and implementation effort.
0 / 12 checked
Sales
Unit costs and purchasing
Customers and terms
Sales process
Checkmarks last while this page remains open. Your information is not collected.
Mark any missing data. An unknown unit cost is not a zero unit cost.
03 / Discount guide
What does a discount really cost?
A short guide with a clear worked example and questions to answer before lowering a price.
Download the discount guidePDF · 2 pages · no registration
EUR 100 price. EUR 70 unit cost.
A 10% discount reduces gross profit per unit from EUR 30 to EUR 20. That is 33.3% less gross profit.
| Metric | Before discount | After discount |
|---|---|---|
| Selling price | 100 € | 90 € |
| Unit cost | 70 € | 70 € |
| Gross profit / unit | 30 € | 20 € |
+50 %
Preserving total gross profit requires 50% more units.
All amounts exclude VAT. Unit cost is held constant. Additional selling and fixed costs are excluded. Higher sales volume is not guaranteed.
Read the decision questions
What additional volume will it generate?
Assess sales that would not happen without the discount, including the effect on volume normally sold at full price.
Will unit costs and capacity stay the same?
Check freight, commissions, returns and production or warehouse workload.
What condition does the customer meet?
Tie the discount to a clear quantity, order value, payment arrangement or other agreed condition.
How long does the offer apply?
Specify the period, eligible products and the person responsible for approval.
When will you review the outcome?
Compare actual volume and gross profit against the original scenario.
QUESTIONS AND ANSWERS
Questions about margins and discounts
What is the difference between margin and markup?
Margin compares gross profit with selling price; markup compares it with unit cost. At a EUR 100 price and EUR 70 unit cost, margin is 30% and markup is 42.86%. These percentages are not interchangeable.
Why can a 10% discount require 50% more sales?
At an initial EUR 100 price and EUR 70 unit cost, gross profit per unit is EUR 30. A 10% discount reduces it to EUR 20. Preserving total gross profit requires 30 ÷ 20 = 1.5 times as many units. This assumes unchanged unit cost and excludes additional selling expenses.
Does this discount calculator guarantee higher profit?
No. It shows the volume required to preserve original total gross profit. Whether that volume can be sold, and whether it changes unit costs or additional expenses, must be assessed separately. If discounted gross profit is zero or negative, higher volume alone cannot compensate.
Are my numbers sent or saved anywhere?
Calculations run in your browser. Calculator inputs are not sent to the server or stored by the page. The downloadable Excel file is a separate template, not an export of the numbers entered in your browser.
May I use and share the Excel calculator with a colleague?
Yes. Enter your data in the yellow cells, save a working copy and share it with Donatas Kemėšius’s authorship and the kemesius.lt reference retained. Formulas and template structure are protected against ordinary editing.
What should I prepare for a commercial audit?
For the first conversation, describe your business, your main question and the available data. Sales, unit cost, customer terms and sales process reports are useful for subsequent work. This page provides a preparation checklist; exact audit scope and deliverables are agreed individually.
LET’S TALK
Want to check this against your own numbers?
Let’s discuss your pricing, unit costs or commercial audit needs. The first conversation is free, with no obligation.