Markup and margin: why the same percentage gives different prices
Compare markup with margin using a 40-unit cost example before choosing a product selling price.
Name the denominator
Markup measures the difference between price and cost as a percentage of cost. Margin measures that difference as a percentage of selling price. They answer different questions, so a 30% markup and a 30% margin do not produce the same selling price.
Calculate a markup price
For a product costing 40 currency units, a 30% markup adds 12. The price becomes 52. The difference between price and included cost is 12, and 12 ÷ 52 × 100 is about 23.08%. That is the margin on the costs in this example.
Compare the example
Cost 40; percentage fees, where shown, are hypothetical and applied to the selling price
| Pricing rule | Fee rate | Selling price |
|---|---|---|
| 30% markup | 0% | 52.00 |
| 30% target margin | 0% | 57.14 |
| 30% target margin | 5% | 61.54 |
On a small screen, scroll the table sideways if needed.
Try this in the calculator
Use cost 40 and a target margin of 30%. First use zero fees; then change only the percentage fee to 5%. Keep any fixed fee at zero to reproduce this comparison.
Try the example ↗Calculate a target-margin price
For a 30% margin with no selling fees, divide cost by 1 − 0.30. The result is 40 ÷ 0.70 ≈ 57.14. Multiplying the cost by 1.30 will not achieve the same result. Use unrounded figures internally, then check the effect of rounding the final selling price.
Include selling fees explicitly
If a selling fee is a percentage of the price, it also takes part of each sale. For a 5% fee and a 30% target margin, the simplified price is 40 ÷ (1 − 0.05 − 0.30) ≈ 61.54. Enter the fee and any fixed charge in the tool rather than treating this example as a live marketplace fee schedule.
Review your cost base
The margin is only as complete as the cost inputs. Packaging, fulfilment and allocated labour may belong in your cost model. The tool does not establish market demand or guarantee take-home profit. Compare the calculated price with your actual costs and intended offer.