Margin vs markup
Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is profit as a share of the cost: (price − cost) ÷ cost.
Buy for 60, sell for 100: profit 40, margin 40%, markup 66.7%. They describe the same sale, so be clear which one you mean when you price.
Price from a target margin
Price = cost ÷ (1 − margin). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100.
Use these prices on a quote or invoice.
Questions
What is a good profit margin?
It depends on the industry. Services often run 20% to 50% or more; retail is usually lower.
Is margin the same as markup?
No. A 50% markup is a 33.3% margin. Margin is based on the price, markup on the cost.
How do I price for a 30% margin?
Divide the cost by 0.7. A cost of 70 becomes a price of 100.
Does this include tax?
No. Work with prices before VAT, GST or sales tax, then add tax on the invoice.