Margin vs markup: the pricing mistake that shrinks profit

They use different starting points

Markup measures profit against cost. Margin measures profit against selling price. That difference means a 50% markup does not produce a 50% margin.

If an item costs 60 and sells for 90, profit is 30. The markup is 30 divided by 60, or 50%. The margin is 30 divided by 90, or 33.3%.

Price from the target margin

When the commercial goal is a target gross margin, work backwards from total unit cost rather than adding the same markup to every product.

• Include direct product or delivery cost.
• Allow for payment fees and per-sale overhead.
• Check tax treatment before comparing the final selling price.
• Stress-test discounts so promotions do not erase the intended margin.