Margin vs markup, settled
Margin is profit as a share of price: (price − cost) ÷ price. Markup is profit as a share of cost: (price − cost) ÷ cost. A $24 cost sold at $40 is a 40% margin but a 67% markup — same transaction, different denominators. The dangerous mistake runs one way: a shop owner who wants a 50% margin and therefore "adds 50%" to cost gets only a 33% margin and wonders where the profit went.
Pricing for a target margin
To hit margin m, divide — don't multiply: Price = Cost ÷ (1 − m). For a 50% margin on a $24 cost: 24 ÷ 0.5 = $48, not $36. This one formula is worth more than most pricing courses.
What is a "good" margin?
Entirely industry-dependent. Grocery retail survives on 1–3% net margins through volume; software and digital products run 70–90% gross margins; restaurants typically land at 3–9% net after labor and rent. Compare yourself with your industry, not with headlines. Two universal rules: know your margin on every product (many businesses lose money on some items without noticing), and remember gross margin still has to cover all fixed costs before anything is truly profit — our break-even calculator picks up exactly there.