Calculate margin, markup, revenue & profit for United States sellers!
Up-to-date as of Feb 17 2021
US Margin Calculator
If you are setting up an online store or traditional retail outlet, you need to be sure that your sales prices are going to cover all of your costs and land you a healthy profit. Our margin calculator allows you to determine the important figures for your retail sales.
In order to use this calculator, you will need two things:
- The cost of the item to be sold
- Details of any sales tax to be included
You will need to know the combined tax rate for your area, and whether it will be included in the ticket price, or added at the register. Keep in mind that the cost to include here is only what you paid for the item, and does not include any business expenses or overheads.
With these two figures, you can work out the ideal sale price for your item, tell you how much of a markup or margin it includes, and the total profit on the sale.
Here we have provided an explanation of some of the most important terms, and how to calculate them using our site, or through your own calculations.
Read on for all the details.
How to calculate revenue
When referring to retail, the revenue is the list price or sale price. Basically, it’s the amount that the customer sees on the item.
The formula for revenue without sales tax is:
Revenue = Cost + Profit
If including sales tax, the formula is:
Revenue + Cost + Profit + Sales tax
Our calculator can help you find the ideal revenue point for your product. Once you have entered the cost price, simply decide how much margin, markup or profit you would like to make on the sale. The calculator will then display the sale price.
The wholesale cost of your item = $25
The profit you want to make = $20
Sales tax = 7%
Your sale price (revenue) should be = $48.15 including sales tax
In the US, the sales tax does not need to be displayed on the price tag. If this is the case for your business, then select "no" at the step "sales tax included in revenue?".
In some instances, your revenue may be set, such as when you are selling a product with a recommended retail price (RRP). In this case, by inputting the cost and revenue, our calculator will tell you the margin and markup for the item. This may help you to decide if it is worth your time selling this item.
How to calculate margin
The margin of a sale is the profit you make compared to the cost of the item, expressed as a percentage. You’ll often see this referred to as profit margin, but should not be confused with profit.
The formula for calculating profit margin without sales tax is:
Margin = Profit/Revenue (as percentage)
If including sales tax, the formula is:
Margin = Profit/(Revenue + Sales tax) (as percentage)
If you have a profit margin you are aiming for, our calculator will show you what sale price you need to list your item for to achieve this.
Cost of item = $50
Desired margin = 60%
Your sale price should be = $125 including sales tax
If you want to know what the profit margin would be on a particular sale, input the cost of the item, the sale price (revenue) and any sales tax details. The profit margin will be displayed below.
How to calculate markup
When we talk about markup, it’s the amount that you add to the cost of the item when selling it, expressed as a percentage. Without a markup, there will be no profit on the sale.
The formula for markup with or without sales tax is:
Markup = Profit/Cost (as percentage)
Our calculator can help you figure out the sale price from your desired markup, or display the markup figure if you have already determined your sale price.
Cost of item = $40
Desired markup = 60%
Your sale price should be = $64 including sales tax
There is no standard markup that a business should put on its prices, unless there is a recommended retail price set by the manufacturer. Instead, markup tends to vary from industry to industry. For example, the markup on new cars is usually 10% at most, while shoes and clothing have at last at 100% markup – and even up to 500%.
How to calculate profit
Profit is what most businesses will be keeping their eye on, as it’s essentially the money that’s being made. Profit on a particular sale, as you would calculate above, is the amount that you receive from the customer, minus the amount that you paid for the item.
The formula for calculating profit without sales tax is:
Profit = Revenue – Cost
When including sales tax, the formula is:
Profit = Revenue – Cost – Sales tax
Profit is usually worked out by subtracting the cost price from revenue, but it’s not as simple when sales tax is involved. Our calculator will show you the true revenue from your sale.
Cost of item = $80
Sale price (revenue) = $180
Sales tax = 7%
Profit on sale = $88.22
Be aware that the profit listed here is only on this sale, and does not take into account any business expenses incurred as part of the sale such as shipping. For more details see our FAQs below.
US sales tax
When setting your sale price, you’ll need to be aware of whether this includes sales tax or not. While the sales tax is included as part of the total cost that the customer pays for an item, it is not considered to be revenue. This is because sales tax is collected on behalf of the government, and must be declared and remitted at a later date.
Sadly, sales tax in the US is not straightforward, as there is no standard rate across the country. Sales tax on an item is comprised of two separate taxes – a local tax and a state tax. Both of these figures will vary from state to state, and local taxes will vary from county to county within a state.
When using our calculator to determine any of the figures above, you’ll need to know if you are charging sales tax or not. If so, you’ll need to know the combined tax rate you are registered for. Finally, you’ll need to decide if your sales tax will be included in the listed price, or added at the checkout.
What is the difference between profit and profit margin?
It’s easy to see why margin and profit are often confused, and in fact, they do both refer to the financial health of a company. However, profit is the amount of money that company makes in dollars and cents, whereas a profit margin is how much it is making compared to how much it has spent. Profit making is shown as a percentage. Profit margin is usually considered a better indicator of how successful a business is.
How is profit margin different to markup?
These margin and markup may appear similar as they are both expressed as a percentage. However, getting them wrong can lead to big mistakes in your pricing. The markup will help you decide on your selling price, and will often be influenced by your industry and the need to remain competitive. The margin on the other hand will give you insights in to the health of your business and the viability of selling a particular product. To explain further, you can see the difference in the formulas. Markup = Profit/Cost (as percentage) Margin = Profit/Revenue (as percentage)
What is net profit margin?
Our calculator above will show you the gross profit margin on any particular sale. But for your business you will also need to take into account the net profit margin. The gross profit margin is simply how much of the revenue (sale price) remains after you factor in the cost of the original item. The net profit margin is how much you are making on the sale when you take into account all other business expenses such as operating costs and taxes. The net profit margin will give you a better idea of the profitability of our business dealings, but is not covered as part of the above calculator.
What is the formula for calculating margin?
To calculate the profit margin on a sale, you will first need to know the profit, the revenue, and any sales tax to be included. Without sales tax: Margin = Profit/Revenue (as percentage) With sales tax: Margin = Profit/(Revenue + Sales Tax) (as percentage) The sales tax in the formula above will need to be included as a dollar amount, and not the tax rate (percentage) that is applicable.