Margin Calculator
Enter any two values above to calculate the rest.
What Is Gross Margin?
Gross margin is the percentage of revenue remaining after subtracting the direct cost of goods sold. It is the primary profitability measure used by Maltese accountants, the Malta Business Registry, and VAT Department guidance.
Formula: Gross Margin % = (Revenue − Cost) ÷ Revenue × 100
Example: A Maltese retailer buys a product for €50 and sells it for €130. Gross margin = (€130 − €50) ÷ €130 × 100 = 61.5%. For every euro of sales, 61.5 cents remain after the cost of goods.
Gross Margin and VAT — Malta's 18% Rate
Malta applies an 18% standard VAT rate — lower than most EU countries but still significant. Maltese VAT-registered businesses must remember that VAT collected belongs to the Commissioner for Revenue, not the business. Calculating margin on a VAT-inclusive price overstates profitability.
Example: You sell a product for €153 including 18% VAT. Your actual revenue = €130 (net). Cost = €50. Correct gross margin = (€130 − €50) ÷ €130 = 61.5%. On €153: 67.3% — a significant overstatement.
Use the VAT toggle in the calculator above to strip the 18% VAT automatically.
Gross Margin vs Markup
| Metric | Formula | Example (cost €50, sell €130) |
|---|---|---|
| Gross Margin | (Revenue − Cost) ÷ Revenue | 61.5% |
| Markup | (Revenue − Cost) ÷ Cost | 160% |
In Maltese retail, markup is commonly used for pricing. Financial statements use gross margin. A 100% markup gives only a 50% gross margin — not the same thing.
Maltese Industry Gross Margin Benchmarks
| Sector | Typical Gross Margin |
|---|---|
| Food retail | 20–30% |
| Fashion / clothing | 50–65% |
| Restaurants / hospitality | 60–75% |
| Gaming / iGaming technology | 55–75% |
| Professional / financial services | 50–70% |
| Construction | 18–28% |
| Tourism / travel | 20–40% |
Malta's iGaming sector — one of the largest globally by licensing volume — typically operates at high gross margins due to the software-driven nature of the business.
Step-by-Step: Pricing with a Target Margin
- Determine your cost price (ex-VAT) — e.g. €45 per unit.
- Set your target gross margin — e.g. 60%.
- Calculate ex-VAT selling price: €45 ÷ (1 − 0.60) = €112.50 ex-VAT.
- Add 18% VAT: €112.50 × 1.18 = €132.75 incl. VAT.
- Check: (€112.50 − €45) ÷ €112.50 = 60% ✓
Frequently Asked Questions
What is a good gross margin for a Maltese business?
It depends on your sector. The core question: does your gross margin cover all fixed costs (rent, salaries, social security contributions, accountant fees, insurance) and still leave a net profit?
How does Malta's VAT rate affect margin calculations?
Always use ex-VAT prices as your revenue base. Malta's 18% VAT is lower than the EU average of 21%, but the principle is the same: VAT collected is not your income. The calculator handles this automatically when the VAT toggle is enabled.
What is the difference between gross margin and net margin?
Gross margin deducts only direct costs. Net margin deducts everything including salaries, rent, depreciation and corporate tax. In Malta, corporate tax is 35% of chargeable income, though a refund mechanism typically reduces the effective rate for shareholders to around 5–10%.
This calculator is completely free and requires no account or signup. Professional financial tools should be accessible to every business owner without barriers.