Markup and margin are different
Markup is measured against cost. Margin is measured against the selling price.
| Example with $100 cost | Calculation | Result |
|---|---|---|
| 20% markup | $100 × 1.20 | $120 selling price; 16.67% margin |
| 20% margin | $100 ÷ 0.80 | $125 selling price; 25% markup |
Which does this toolkit use?
The price-book tool uses target margin: total included cost ÷ (1 − margin). Tax is added separately and is not treated as profit. Ensure your inputs include relevant overhead before interpreting the result.
Avoid adding profit twice
Enter a labor cost rate that includes relevant overhead but excludes your target profit. Enter profit once in the margin field. If you use a selling rate that already includes profit as your labor cost, the result will add margin again.