Markup starts from cost
A markup adds a percentage of production cost. With a $2 cost and 40% markup, add $0.80, giving a $2.80 pre-tax price. The profit is $0.80, which is 28.57% of the selling price.
Margin starts from the selling price
A target margin asks what fraction of the selling price should remain after production cost. With a $2 cost and 40% margin, the unrounded price is $3.3333…. A rounded $3.33 quote achieves about 39.94%, not exactly 40%, because prices use cents.
A side-by-side check
| Target | Quote price | Profit | Achieved margin |
|---|---|---|---|
| 40% markup | $2.80 | $0.80 | 28.57% |
| 40% margin | $3.33 | $1.33 | 39.94% |
| 100% markup | $4.00 | $2.00 | 50.00% |
Make unit price and total agree
For a quantity quote, these tools round the unit selling price to two decimals, multiply by the quantity, then work out profit from that actual total. This avoids showing a unit price that does not add up to the stated quote.
Sales tax is separate from production profit in this simple model. Marketplace fees, shipping charges and taxes on fees can change the answer; do not treat a generic margin calculation as a platform-specific fee calculator.
Choose a target deliberately
Neither margin nor markup picks the right market price for you. Start from your real costs, choose the convention you use in your business, and compare the resulting price with the value of the job.