Margin vs markup
- Margin = profit ÷ selling price. A 1,200 sale that cost 800 has a 33.3% margin.
- Markup = profit ÷ cost. The same item has a 50% markup.
To reach a margin M, price = cost ÷ (1 − M). Adding M% to the cost gives a markup of M%, which is a smaller margin — a common pricing mistake.