Margin and VAT Calculator
Enter a cost price, your target gross margin, and the applicable VAT rate to calculate the net selling price (ex. VAT), the VAT amount, and the final gross price (inc. VAT) in one step.
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Customer-facing price including VAT
- 1
Net price (ex. VAT)
60 ÷ (1 − 40 ÷ 100) = 100Cost divided by (1 − margin fraction) gives the selling price that achieves the target margin. - 2
VAT amount
100 × 20 ÷ 100 = 20 - 3
Gross price (inc. VAT)
100 + 20 = 120
How does this calculator work?
Net selling price = Cost ÷ (1 − Margin%); Gross price = Net × (1 + VAT%). For cost 60, margin 40%, VAT 20%: net = 100, gross = 120. VAT is charged on the net price and is separate from profit. Standard EU VAT rates range from 17–25% (2025) — enter your country's rate and verify for your product category.
Formula
How this is calculated
Pricing a product requires satisfying two goals simultaneously: achieving the desired profit margin and displaying the legally required VAT-inclusive price to customers. The first step is finding the net selling price (ex. VAT) that delivers the target margin. Since gross margin = (price − cost) ÷ price, rearranging gives Net price = Cost ÷ (1 − Margin/100). For example, a cost of 60 and a 40% margin require a net price of 60 ÷ 0.60 = 100.
The VAT amount is then applied to the net price: VAT amount = Net price × VAT rate. The gross (VAT-inclusive) price the customer pays is Net price + VAT amount = Net price × (1 + VAT rate). For a 20% VAT rate, the example becomes 100 × 1.20 = 120 gross. The business collects the VAT from the customer and remits it to the tax authority — VAT is not part of the profit margin.
VAT rates in this calculator are editable. Standard rates as of 2025 vary widely: 20% in the UK and France, 19% in Germany, 23% in Poland, 25% in Denmark and Sweden. Reduced rates apply to many food, medical, and cultural goods in most EU countries — always confirm the rate applicable to your specific product category and jurisdiction.
Frequently asked questions
Step 1 — find net price: Net price = Cost ÷ (1 − Margin/100). Step 2 — add VAT: Gross price = Net price × (1 + VAT/100). Example: cost 60, margin 40%, VAT 20% → Net price = 60 ÷ 0.60 = 100; Gross price = 100 × 1.20 = 120.
VAT is charged on the net selling price (ex. VAT), not on the cost. The seller collects VAT from the customer and remits it to the tax authority, so VAT is completely separate from the profit margin.
A 100% margin implies an infinite selling price (Cost ÷ (1 − 1) is undefined). In the standard gross-margin formula, margins must be below 100%: any value ≥ 100% means the profit equals or exceeds the selling price, which is mathematically impossible with positive costs.
TG we-Calculate Editorial Team. (2026). Margin and VAT Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/margin-and-vat-calculator
TG we-Calculate Editorial Team. "Margin and VAT Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/margin-and-vat-calculator.
TG we-Calculate Editorial Team, "Margin and VAT Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/margin-and-vat-calculator
@misc{wecalculate_margin_and_vat_calculator, title = {Margin and VAT Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/margin-and-vat-calculator}}, year = {2026}, note = {TG we-Calculate} }
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