Know your numbers?
Use the free invoice generator to bill clients at the right price, or browse invoice templates if you want a ready-made format.
This is one of the most common points of confusion in pricing. A 25% markup and a 25% margin sound similar but give you very different numbers.
Once you know your selling price, use the GST calculator to add tax before raising your invoice.
Profit margin is the percentage of the selling price that is profit. Markup is the percentage added on top of the cost price. For example, if cost is ₹100 and you sell at ₹125: markup = 25%, but margin = 20%. Margin is always lower than markup for the same transaction.
Gross profit margin = ((Revenue − Cost) ÷ Revenue) × 100. If you sold goods for ₹50,000 and the cost was ₹35,000, your gross margin is ((50,000 − 35,000) ÷ 50,000) × 100 = 30%.
It depends on the industry. Retail businesses often run at 2–5% net margin, while software or consulting businesses can reach 20–40%. As a rule of thumb, any margin above your industry average is a good starting target. The key is knowing your number and working to improve it consistently.
Use the formula: Selling price = Cost ÷ (1 − Target margin%). If your cost is ₹800 and you want a 25% margin, the selling price = 800 ÷ (1 − 0.25) = 800 ÷ 0.75 = ₹1,066.67.
Three terms come up constantly in pricing and profitability discussions. Here is what each means and how to calculate it:
Gross Profit Margin
(Revenue - Cost of Goods) / Revenue x 100
Revenue Rs 1,000 - COGS Rs 600 = Rs 400 gross profit -> 40% margin
The percentage of revenue left after paying for the direct cost of producing or purchasing what you sell.
Net Profit Margin
(Revenue - All Expenses) / Revenue x 100
Revenue Rs 1,000 - All costs Rs 850 = Rs 150 net profit -> 15% margin
The percentage left after every expense, including operating costs, salaries, interest, and taxes.
Markup
(Selling Price - Cost) / Cost x 100
Cost Rs 600, sell at Rs 1,000 -> (400 / 600) x 100 = 66.7% markup
How much above cost you are pricing. Markup is calculated on cost, while margin is calculated on selling price.
Acceptable margins vary a lot by sector, business model, location, and accounting method. The ranges below are broad examples to help you think about pricing; they are not targets, guarantees, or industry advice.
| Industry / Business Type | Typical Gross Margin |
|---|---|
| Software / SaaS | 70-90% |
| Consulting / Freelance services | 50-75% |
| E-commerce (own brand) | 40-60% |
| Retail (branded goods) | 30-50% |
| Restaurants / Food service | 25-40% |
| Manufacturing | 20-40% |
| Trading / Wholesale | 10-25% |
| Construction / Contracting | 10-20% |
Working backward from a target margin is the most reliable way to set prices. Use this formula:
Target Selling Price formula
Selling Price = Cost / (1 - Target Margin%)
Example: Your cost is Rs 800 and you want a 30% gross margin. Selling Price = Rs 800 / (1 - 0.30) = Rs 800 / 0.70 = Rs 1,143
Common mistakes when setting prices for a target margin:
Once you have your price, add the appropriate tax using the GST Calculator for India or the VAT Calculator for international sales, then bill the client using the free invoice generator.
Last reviewed: 2 August 2026. This calculator explains arithmetic relationships between cost, selling price, markup, and margin. It does not include every operating cost, tax effect, payment fee, return, discount, or industry-specific accounting treatment. Use it as a pricing aid and review final business decisions with your own records or advisor.
Three modes to cover the most common scenarios — find your selling price from a target margin, calculate the margin from cost and price, or work out profit from total revenue.
Know cost and target margin % → find selling price
Fill in the fields on the left to see the breakdown here.
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A 25% markup gives you a 20% margin — not the same number. This tool shows both so you never confuse them.
If you know your cost and want to hit a specific margin, use the first mode. Enter cost and your target margin percentage — the calculator works out the exact selling price you need to charge.
Use the Revenue + Cost mode to check overall business performance. Enter total monthly revenue and total costs to get your profit and margin for that period at a glance.