Margin · growth · offer
Margin and growth calculator – margin, growth and offer difference
Four business percentage calculations in one: gross margin in pounds and per cent, the sale price for a target margin, revenue growth, and the difference between a purchase offer and the asking price.
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Margin and mark-up are not the same thing
This is the most common confusion in pricing, and it costs real money. Both are worked out from the same transaction, but the divisor is different.
margin % = (sale price − cost price) / sale price × 100
mark-up % = (sale price − cost price) / cost price × 100
When you buy for £28 and sell for £49, the margin is £21. Measured against the sale price it's 42.86%; measured against the cost price it's 75%. If a supplier talks about margin and you and your accountant talk about mark-up, the pricing goes wrong on the first calculation.
| Margin of sale price | Mark-up on cost price | Multiplier on cost |
|---|---|---|
| 20% | 25% | × 1.25 |
| 30% | 42.9% | × 1.43 |
| 40% | 66.7% | × 1.67 |
| 50% | 100% | × 2.00 |
| 60% | 150% | × 2.50 |
Always calculate with net prices. If you compare a VAT-inclusive sale price with a net cost price, the margin looks a good twenty per cent better than it really is. You can get a breakdown with the VAT calculator.
What a discount does to margin
A discount is taken from the sale price, but it comes entirely out of the margin. Example: cost price £28, sale price £49, margin £21, i.e. 42.9%.
| Discount | Sale price | Margin £ | Margin % | Margin lost |
|---|---|---|---|---|
| 0% | £49.00 | £21.00 | 42.9% | – |
| 10% | £44.10 | £16.10 | 36.5% | −23% |
| 20% | £39.20 | £11.20 | 28.6% | −47% |
| 30% | £34.30 | £6.30 | 18.4% | −70% |
| 40% | £29.40 | £1.40 | 4.8% | −93% |
So a ten per cent discount takes almost a quarter of the margin. When planning a promotion, it's worth working out how much the sales volume would need to grow to keep the margin in pounds unchanged – often the growth needed is surprisingly large.
Revenue growth and CAGR
Growth is worked out like any change: (new − old) / old × 100.
Revenue of £420,000 → £512,000 is 21.9% growth. When you look at several years, you
don't add or average the individual yearly growth percentages, because growth compounds.
For that you use the compound annual growth rate:
CAGR = ((end value / start value)^(1 / periods) − 1) × 100
Over three years, £420,000 → £512,000 is about 6.8% a year. Because of seasonality, it's better to compare with the same period last year (YoY) than with the previous month (MoM), especially in seasonal sectors.
How much does sales have to grow when the price falls?
The profitability of a promotion turns on this question. When you cut the price, keeping the margin in pounds requires more units – and the growth needed is almost always larger than intuition suggests.
sales growth needed % = discount / (margin % − discount) × 100
| Discount | Margin 30% | Margin 40% | Margin 50% |
|---|---|---|---|
| 5% | +20% | +14% | +11% |
| 10% | +50% | +33% | +25% |
| 15% | +100% | +60% | +43% |
| 20% | +200% | +100% | +67% |
At a 30% margin, even a ten per cent discount requires one-and-a-half times the sales. So the profitability of a promotion shouldn't be judged by sales growth alone, but by the development of the margin in pounds.
A purchase offer as a percentage
In a property sale the size of an offer is discussed as a percentage of the asking price. An offer of £228,000 on an asking price of £245,000 is 6.94% below the asking. The calculator also shows the difference in pounds and a 10% deposit. Stamp Duty Land Tax depends on the property, price band and your circumstances – always check the current rules and thresholds with HMRC and the parties to the sale.
The basics of margin and growth calculation
Margin is calculated from the sale price and mark-up from the cost price. The same deal shows two different numbers depending on which you use.
Formulas and examples
Margin percentage
(sale price − cost price) / sale price × 100Example
Cost £28, sale £49: 21 / 49 × 100 = 42.86%.
Note
Use net prices, otherwise the margin looks too good.
Mark-up
(sale price − cost price) / cost price × 100Example
The same deal from the cost price: 21 / 28 × 100 = 75%.
Note
Always confirm which figure the other person means.
Sale price for a target margin
cost price / (1 − margin / 100)Example
Cost £28, target 45%: 28 / 0.55 = £50.91.
Note
Don't multiply the cost by 1.45 – the result is too small.
Compound annual growth
((end / start)^(1 / periods) − 1) × 100Example
£420,000 → £512,000 over three years: 6.8%/year.
Note
Yearly growth percentages aren't added or averaged.
Concepts and classification
| Gross margin | Sale price minus variable costs. |
|---|---|
| Margin percentage | Margin relative to the sale price. |
| Mark-up | Margin relative to the cost price. |
| MoM / YoY | Month-on-month or year-on-year comparison. |
| CAGR | Average annual growth over several periods. |
Limitations of the calculator
- The calculator does not separate variable and fixed costs.
- Stock value, wastage and clearance sales are not taken into account.
- A growth percentage can't be worked out if the comparison period is zero.
- The Stamp Duty rate and its application must be checked with HMRC.
How up to date the information is
When it was checked
Content and the percentages used were checked on 12 August 2026.
Disclaimer
The calculator gives a mathematical result from the numbers you enter. It is not an official decision, an offer or professional advice. See the terms of use.
Topics
This calculator belongs to the following topic areas. On the topic page you'll find all the calculators and guides on the same theme in one place.
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Frequently asked questions about margin and growth
How do I work out gross margin as a percentage?
(sale price − cost price) / sale price × 100. Use net prices. For example a cost of £28 and a sale price of £49 gives a margin of £21, i.e. 42.86% of the sale price.
What is the difference between margin and mark-up?
Margin is calculated from the sale price and mark-up from the cost price. The same £21 margin is 42.86% of the sale price but 75% of the cost price. Always be sure which one the other person means.
How do I work out the sale price for a target margin?
Divide the cost price by (1 − margin/100). If the cost is £28 and the target margin is 45% of the sale price, the sale price is 28 / 0.55 = £50.91 excluding VAT. Don't multiply the cost by 1.45 – that gives too low a price.
How do I work out revenue growth over several years?
Use the compound annual growth rate: ((end / start)^(1/years) − 1) × 100. You don't add the yearly growth percentages together, because growth compounds.
How much does a discount eat into margin?
More than most people expect. When the margin is 42.9%, a 10% discount off the sale price reduces the margin in pounds by about 23% and a 30% discount by about 70%.