Margin vs markup
Margin is profit as a share of the price; markup is profit as a share of the cost. Buying at $20 and selling at $50 is a 60% margin and a 150% markup. Mixing them up is one of the most common pricing mistakes.
To find the price for a target margin, divide cost by (1 − margin). For a 40% margin on a $20 item: $20 ÷ 0.6 = $33.33.
FAQ
What is the formula for profit margin?
Profit margin = (price − cost) ÷ price × 100.
Is a 100% markup a 100% margin?
No. A 100% markup doubles the cost, which is a 50% margin.