# Margin and VAT Calculator

URL: https://speedycalculator.com/calculators/finance/margin-and-vat/
Last updated: 2026-10-25

> The margin and VAT calculator works out the net and gross (VAT-inclusive) selling price from your cost and target margin or markup, the VAT amount, profit – or, from a gross price, works back to the margin.

## Inputs

- Cost (excluding VAT)
- Pricing by
- Margin / markup (%)
- VAT rate (%)

## Results

- Net price (excluding VAT)
- VAT
- Gross price (including VAT)
- Profit
- Margin
- Markup

## Formula

```
Net price = cost ÷ (1 − margin)
VAT = net price × VAT rate
Gross price = net price × (1 + VAT rate)
From a gross price: net = gross ÷ (1 + VAT)
```

## Explanation

In the UK and EU consumer prices include VAT, so remove VAT before calculating margin. A VAT-registered business reclaims the VAT it pays on costs, so cost should be entered without VAT.

### How to use the Margin and VAT Calculator

- **Cost (excluding VAT)**
- **Pricing by**
- **Margin / markup**
- **VAT rate**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the cost (excluding VAT), choose margin or markup and its percentage, and the VAT rate.

### Tips

- Know the difference between margin (profit ÷ price) and markup (profit ÷ cost).
- Apply successive discounts one after another – they do not simply add up.
- Check whether prices already include sales tax or VAT.
- Round prices only at the very end of the calculation.

### Common mistakes to avoid

- Adding discount percentages together.
- Pricing from a target margin using the markup formula.
- Forgetting payment-processing and shipping fees.

### Inputs explained

FieldWhat to enterCost (excluding VAT)Amount in your currencyPricing byChoose one: Margin, MarkupMargin / markupIn %VAT rateIn %

### What each result means

- **VAT** = [Net price (excluding VAT)]×[VAT rate]÷100
- **Gross price (including VAT)** = [Net price (excluding VAT)] + [VAT]
- **Profit** = [Net price (excluding VAT)] - [Cost (excluding VAT)]
- **Margin** = [Profit]÷[Net price (excluding VAT)]×100
- **Markup** = [Profit]÷[Cost (excluding VAT)]×100

### Example values

How the main result changes when **Cost** changes and everything else stays at the example values above:

Cost (excluding VAT)Gross price (including VAT)2036.923055.384073.855092.3160110.7780147.69

## Worked example

Inputs — Cost (excluding VAT): $40; Pricing by: Margin; Margin / markup: 35 %; VAT rate: 20 %.

Results — Net price (excluding VAT) = $61.54; VAT = $12.31; **Gross price (including VAT) = $73.85**; Profit = $21.54; Margin = 35 %; Markup = 53.85 %.

## FAQ

**Should margin be calculated with or without VAT?**
Without – VAT isn't your income.

**How do I remove VAT from a price?**
Divide by (1 + VAT rate), e.g. ÷ 1.2 for 20%.

**What is the UK VAT rate?**
20% standard, 5% reduced, 0% zero rate.

**What formula does the Margin and VAT Calculator use?**
Net price = cost ÷ (1 − margin).


## Sources

- [GOV.UK – VAT rates](https://www.gov.uk/vat-rates)