METHOD & GUIDANCE
How this calculation works
Enter figures from the same period and on a consistent sales tax-inclusive or sales tax-exclusive basis. Tool IQ recalculates every output immediately; nothing you enter is saved or sent to us.
How to use the result
Compare the result with your target margin, then change price or unit cost separately to see which lever closes the gap with the least commercial risk.
Worked example
The opening example sells at 120 with 72 of cost. Profit is 48, so gross margin is 40% while markup on cost is 66.7%.
Common mistakes
- Treating markup and margin as interchangeable.
- Leaving delivery, payment or fulfilment costs out of unit cost.
- Comparing tax-inclusive revenue with tax-exclusive costs.
Frequently asked questions
Is this calculator free?
Yes. It requires no account and stores no calculation inputs.
Can I use the answer for a formal filing?
No. It is a planning estimate, not accounting, tax, legal or investment advice. Confirm material decisions with a qualified professional.
Should I include sales tax?
Use a consistent basis throughout. Businesses that recover input tax commonly model net figures; consumer-facing prices are often considered gross.
Continue the decision
- Break-even Calculator — Find the sales volume needed to cover every cost.
Method reviewed 26 July 2026. Figures are illustrative and calculated locally in your browser.