Business Calculator UK | Markup, Margin & Profit Calculator

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UK Business Calculator

Essential business calculations including markup, margin, profit, pricing, and break-even analysis for UK businesses.

Markup Calculator

Calculate selling price from cost and markup percentage.

Cost Price (£)

What you pay for the product/service

Markup Percentage (%)

Percentage added to cost

Profit Margin Calculator

Calculate profit margin from cost and selling price.

Cost Price (£)

Selling Price (£)

Pricing Calculator

Calculate the maximum cost price to achieve your desired margin.

Target Selling Price (£)

Desired Margin (%)

Break-Even Calculator

Calculate how many units you need to sell to cover your costs.

Fixed Costs (£/month)

Rent, salaries, insurance, etc.

Variable Cost per Unit (£)

Materials, packaging, etc.

Selling Price per Unit (£)

Expected Monthly Sales (units)

Optional: compare to break-even

Profit Analysis

Comprehensive profit analysis for your business or product.

Total Revenue (£)

Cost of Goods Sold (£)

Operating Expenses (£)

Rent, utilities, salaries, marketing

Tax Rate (%)

UK Corporation Tax: 19-25%

Markup vs Margin: What's the Difference?

These terms are often confused, but understanding the difference is crucial for pricing:

Markup

Percentage added to cost price

Markup % = (Profit ÷ Cost) × 100

Example: Buy for £50, sell for £75

Markup = (£25 ÷ £50) × 100 = 50%

Margin

Profit as percentage of selling price

Margin % = (Profit ÷ Selling Price) × 100

Example: Buy for £50, sell for £75

Margin = (£25 ÷ £75) × 100 = 33.3%

Quick Conversion Table

Markup %	Margin %	Multiplier
15%	13.0%	×1.15
20%	16.7%	×1.20
25%	20.0%	×1.25
33.3%	25.0%	×1.33
50%	33.3%	×1.50
100%	50.0%	×2.00
150%	60.0%	×2.50
200%	66.7%	×3.00

Pro Tip

Use margin when analyzing financial reports and comparing businesses. Use markup when setting prices from your cost. Many retail businesses use standard markups (e.g., 100% for gifts, 50% for groceries).

UK Industry Profit Margin Benchmarks

Compare your margins to typical UK industry averages:

Industry	Gross Margin	Net Margin	Typical Markup
Retail (general)	25-50%	2-5%	50-100%
Grocery/Supermarket	20-25%	1-3%	25-35%
Restaurant/Cafe	60-70%	3-9%	200-300%
Clothing/Fashion	40-60%	4-13%	100-150%
Professional Services	50-75%	15-25%	100-300%
Construction	15-25%	2-10%	15-30%
Manufacturing	25-35%	5-10%	30-50%
Software/Tech	70-90%	15-30%	200-900%

Remember

Gross margin is profit before operating expenses. Net margin is profit after all expenses including tax. A high gross margin doesn't guarantee profitability if operating costs are high.

Understanding Break-Even Analysis

Break-Even Formula

Break-Even Units = Fixed Costs ÷ (Selling Price - Variable Cost)

The difference (Selling Price - Variable Cost) is called the contribution margin.

Example Break-Even Calculation

Inputs

Fixed Costs: £10,000/month
Variable Cost per Unit: £30
Selling Price: £50

Results

Contribution Margin: £20
Break-Even Units: 500
Break-Even Revenue: £25,000

Why Break-Even Matters

Helps set realistic sales targets
Informs pricing decisions
Essential for business plans and investor pitches
Helps evaluate new product viability
Guides decisions on fixed cost investments

Pricing Strategies for UK Businesses

Cost-Plus Pricing

Add fixed markup to costs. Simple but may ignore market conditions.

Value-Based Pricing

Price based on perceived value to customer. Higher margins possible.

Competitive Pricing

Match or undercut competitors. Works in commodity markets.

Dynamic Pricing

Adjust prices based on demand. Common in travel, hospitality.

VAT Consideration

Remember to factor in VAT (20% standard rate) when setting prices. If you're VAT registered, your selling price to consumers includes VAT, but you'll keep less than the sticker price. Use our VAT Calculator to work out net and gross prices.

UK Tax Considerations for Business Profits

Tax Type	Rate (2025/26)	Applies To
Corporation Tax (small profits)	19%	Profits under £50,000
Corporation Tax (marginal)	19-25%	Profits £50,001-£250,000
Corporation Tax (main rate)	25%	Profits over £250,000
Income Tax (sole traders)	20-45%	Profits taxed as income
National Insurance Class 4	6%	Self-employed profits £12,570+
VAT	20%	Turnover over £90,000

Professional Advice

Tax rules are complex and change regularly. Always consult a qualified accountant for advice specific to your business situation. The calculations on this page are for illustrative purposes only.

Frequently Asked Questions

What is the difference between markup and margin?

Markup is the percentage added to the cost price to determine the selling price. Margin is the percentage of the selling price that represents profit. For example, if you buy for £50 and sell for £100: markup is 100% (you added £50 to the £50 cost), but margin is 50% (£50 profit out of £100 sale). Markup is based on cost; margin is based on selling price.

How do I calculate profit margin?

Profit margin = (Selling Price - Cost Price) ÷ Selling Price × 100. For example, if you sell a product for £100 and it costs you £60: margin = (£100 - £60) ÷ £100 × 100 = 40%. This means 40% of your revenue from this sale is gross profit.

What is a good profit margin for a small business?

Good profit margins vary significantly by industry. Retail businesses typically aim for 25-50% gross margin. Service businesses often achieve 50-75% gross margin. Manufacturing averages 25-35%. For net profit margin (after all expenses), 10-20% is generally considered healthy for most UK small businesses. However, volume businesses like supermarkets may operate on 2-3% net margins successfully.

How do I calculate break-even point?

Break-even point = Fixed Costs ÷ (Selling Price - Variable Cost per Unit). Fixed costs are expenses that don't change with sales volume (rent, salaries). Variable costs change with each unit (materials, packaging). The result tells you how many units you need to sell to cover all costs. For example, with £10,000 fixed costs, £50 selling price, and £30 variable cost: 10,000 ÷ (50-30) = 500 units to break even.

Should I use markup or margin for pricing?

Use markup when calculating selling prices from your costs—it's more intuitive for pricing decisions. Use margin when analyzing financial performance, comparing businesses, or communicating with investors. Most retail businesses set prices using markup but report results using margins. Many industries have standard markups (e.g., 100% for jewellery, 50% for clothing).

How do I increase my profit margins?

There are several strategies: (1) Increase prices if the market allows. (2) Reduce cost of goods through better supplier negotiations. (3) Reduce operating expenses through efficiency improvements. (4) Focus on higher-margin products or services. (5) Improve operational efficiency to serve more customers. (6) Add value to justify premium pricing. Consider A/B testing price changes to find optimal pricing.

What's the difference between gross and net profit?

Gross profit = Revenue - Cost of Goods Sold. It's your profit before operating expenses. Net profit = Gross Profit - Operating Expenses - Tax. It's your final profit after all costs. For example, if you sell £100,000 of products that cost £60,000 to make, gross profit is £40,000 (40% margin). If operating expenses are £25,000 and tax is £3,000, net profit is £12,000 (12% net margin).

Do these calculations include VAT?

These calculations work with VAT-exclusive figures for business-to-business transactions, or for businesses below the VAT threshold (£90,000 turnover). If you're VAT registered and selling to consumers, remember that 20% of your selling price goes to HMRC. Always calculate margins and markups on the VAT-exclusive price for accurate analysis.

Richard Hughes

FCCA, MBA, Chartered Accountant

Richard is a Fellow of the Association of Chartered Certified Accountants with over 20 years of experience advising UK small businesses on pricing strategies, financial analysis, and profitability optimization.

Disclaimer: This calculator provides general guidance on business calculations. Results are for illustrative purposes only and should not be considered financial or tax advice. Tax rates and thresholds change regularly. Always consult a qualified accountant or financial adviser for decisions specific to your business circumstances.