Margin vs. markup — they're not the same
Both describe the gap between cost and price, but against different bases. Margin is profit as a share of the sale price: a 40% margin means 40% of what the customer pays is profit. Markup is profit as a share of the cost: the same deal is a 66.7% markup. Confusing the two is a common pricing mistake, so this tool always shows both.
Setting a price from a target margin
To hit a margin you can't just add that percentage to cost — that's markup. The correct formula divides: price = cost ÷ (1 − margin). At a 40% margin, a cost of 60 needs a price of 100, not 84. The bar under the result makes the split visible: the grey part is your cost, the orange part is your profit.
Why margin can't reach 100%
Margin is a share of the price, so 100% margin would mean zero cost and an infinite markup — impossible for anything you actually buy or make. As the target margin climbs toward 100%, the required price rises steeply, which is why the tool flags margins of 100% or more.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a cost of 100 gives a price of 150 and a margin of about 33%. A 50% margin on that cost needs a price of 200. Always check which one a figure refers to.
Which should I use to set prices?
Margin is usually the better target because it maps directly to profitability on each sale. Use the Sale price tab, set your margin, and read the price to charge.