How do I get the net price from a gross price?

Divide the gross price by (1 + VAT rate). At 20%: 120 / 1.2 = €100 net.

What is the difference between margin and markup?

Markup divides profit by cost; margin divides profit by the net selling price.

Do French micro-entrepreneurs charge VAT?

Not while under the VAT exemption thresholds; invoices then state “TVA non applicable, art. 293 B du CGI”.

FINANCE7 min2026-10

VAT, Margin & Selling Price Guide: Net, Gross and Profitability

Convert net to gross prices, tell margin from markup and set a profitable selling price: formulas, worked examples and common mistakes.

Pricing looks simple until you have to include VAT, cover your costs and keep a healthy margin. Many small businesses lose money without noticing because they mix up margin and markup, or remove VAT from a gross price with a plain percentage.

This guide covers the three essential calculations — net/gross, margin, selling price — with worked examples you can reproduce in our calculators.

Converting net to gross (and back)

The gross price equals net × (1 + rate). With 20% VAT, an item at €100 net costs €120 gross.

To go back to net, divide instead of subtracting: 120 / 1.2 = €100. Taking 20% off €120 gives €96, a €4 error that distorts your books.

Tip

VAT included in a gross price = gross × rate / (1 + rate). At 20%, that is simply gross / 6.

Common VAT rates in France (2026)
Rate	Examples	Multiplier
20%	Standard rate: most goods and services	1.20
10%	Restaurants, renovation work, transport	1.10
5.5%	Food, books, energy	1.055
2.1%	Reimbursed medicines, press	1.021

Margin, margin rate and markup

Gross margin is the net selling price minus the net cost. A product bought at €60 and sold at €100 net leaves a €40 margin.

Markup divides that margin by cost (40 / 60 = 66.7%), while margin rate divides it by the selling price (40 / 100 = 40%). Both describe the same sale but are never equal, so always say which one you mean.

Setting a profitable selling price

From a target margin rate: net price = cost / (1 − margin rate). With a €60 cost and a 40% margin, the price is 60 / 0.6 = €100 net, or €120 gross.

Include indirect costs (shipping, marketplace fees, bank fees) in your cost price, otherwise your margin is overstated.

Common mistake

A 20% discount followed by a 20% increase does not return to the original price: 100 → 80 → 96.

Frequently Asked Questions

Answers to common questions.

Interactive Tools Related to this Guide

Try these free tools to apply the techniques covered in this guide.

VAT & Sales Tax Calculator

Instantly calculate net amount, VAT and gross price for France, UK, Europe, US/Canada sales tax or custom rates.

Finance

Profit Margin & Markup Calculator

Calculate your gross profit margin, markup rate, sales margin, and multiplier coefficient with VAT/sales tax.

Finance

Percentage Calculator

Percentages, increases and discounts.

Calculators