What is the difference between markup and margin?
Markup is based on cost (profit ÷ cost × 100), margin is based on selling price (profit ÷ selling price × 100). A 50% markup on $100 cost = $150 price, but the margin is only 33.3%.
How do I convert markup to margin?
Margin = Markup ÷ (1 + Markup) × 100. So 50% markup → 50/150 × 100 = 33.3% margin.
Why does this matter for pricing?
Confusing markup with margin leads to underpricing. If you want a 30% profit margin, you need a ~42.9% markup, not 30%.