Margin & VAT Calculator
From cost, target margin and VAT rate, work out the price excluding VAT, the VAT amount, the price including VAT and the profit.
Input Data
Results
At a glance:Margin & VAT combines a margin-based price with VAT on top. For cost C, margin% m and VAT% v: ex-VAT price = C ÷ (1 − m ÷ 100); VAT amount = ex-VAT price × v ÷ 100; inc-VAT price = ex-VAT price × (1 + v ÷ 100); profit = ex-VAT price − C.
Formula
Ex-VAT price = cost ÷ (1 − margin% ÷ 100).
VAT amount = ex-VAT price × VAT% ÷ 100.
Inc-VAT price = ex-VAT price × (1 + VAT% ÷ 100); profit = ex-VAT price − cost.
$$P_{ex} = \dfrac{\text{Cost}}{1 - m}, \quad \text{VAT} = P_{ex} \times v$$$$P_{inc} = P_{ex} + \text{VAT}, \quad \text{Profit} = P_{ex} - \text{Cost}$$How to Use
- Enter the unit cost (ex-VAT).
- Enter the target margin and the VAT rate.
- Read the ex-VAT price, VAT amount, inc-VAT price and profit.
FAQ
Why is margin based on the ex-VAT price, not the VAT-inclusive price?
Margin = (price − cost) ÷ price, where 'price' means the revenue the business actually keeps — the ex-VAT price. VAT is collected from the customer on behalf of the government and remitted, so it is never the business's revenue or profit. If you count VAT in the price when computing margin, you overstate both margin and profit and end up pricing too low. This calculator works out the ex-VAT price first, then adds VAT on top.
Hong Kong has no VAT — is this calculator still useful to me?
Yes. If you sell only in Hong Kong, set the VAT rate to 0; the inc-VAT price then equals the ex-VAT price and the tool simply becomes a margin-based pricer. But many Hong Kong merchants price for export, cross-border e-commerce or overseas customers where the destination has VAT/GST (UK 20%, EU, Singapore GST, Australia GST, mainland China VAT, etc.). In those cases the tool adds the local VAT correctly while still hitting your target margin.
What is the difference between margin and markup?
Both describe profit, but with different denominators. Margin = (price − cost) ÷ price (price as denominator); markup = (price − cost) ÷ cost (cost as denominator). Since price is always greater than cost, the markup is always higher than the margin for the same deal — a 30% margin corresponds to roughly a 42.86% markup. Be clear whether your target figure is a margin or a markup; they are not interchangeable. This tool uses the price-based margin.
What is the difference between VAT, sales tax and GST?
All three are indirect taxes ultimately borne by the consumer and collected by the merchant, but they differ in how they are charged. VAT (Value-Added Tax) and GST (Goods and Services Tax) are essentially the same multi-stage, input-creditable value-added tax — only the name differs by country (EU/UK/China use VAT; Singapore/Australia/Canada/India use GST). Sales tax (e.g. in the US) is usually charged once at the final retail stage with no input credit. In all cases, compute margin and profit on the ex-tax price and add the tax to the consumer separately.
Why can't the target margin be 100%, and why does the price explode near 100%?
Margin = profit ÷ ex-VAT price. A 100% margin would require profit to equal the whole price, i.e. zero cost. In the formula, ex-VAT price = cost ÷ (1 − margin), so at 100% the denominator is zero and the price tends to infinity; that is why the calculator caps margin at 99%. As the margin approaches 100%, the multiplier explodes: 50% → 2× cost, 80% → 5×, 90% → 10×, 99% → 100×. Such prices are unrealistic, so set a margin that covers all costs (shipping, commissions, overheads) and remains acceptable to the market.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.