Markup is not margin: calculate both without pricing backwards

Markup divides profit by cost. Margin divides profit by selling price. A 50 percent markup on a $20 cost produces a $30 price and a 33.33 percent margin, not a 50 percent margin.

Craft pricing calculation showing how a $20 sale price leaves $6.45 after materials and selling costs.

Use the formula

Markup: (Price - Cost) / Cost
Margin: (Price - Cost) / Price
Price from target margin: Cost / (1 - Target margin)

Worked example

A verified candle example starts at a $20 price and exposes materials, fees, overhead, and the maker's time target.

Line	Result	Meaning
Materials	$7.04	Materials and ordinary waste
Selling fees	$2.10	Percentage plus fixed fee in the illustration
Current hourly return	$11.34	Before a separate business-profit target
Price for the chosen time target	$27.13	Generated from the visible inputs

Repeatable method

Choose the correct denominator.
Include labor, overhead, and fees in the cost model.
Solve the price from the target.
Test the calculated price against market response.

Questions and answers

Is 50 percent markup a 50 percent margin?: No. On a $20 cost it produces a $30 price and a one-third margin.
Does a calculated price prove demand?: No. It shows what the entered cost and target assumptions require.

Sources

University of Maryland Extension: Matching Prices to Market OutletsMarkup and margin formulas and the role of market response.
Toronto Metropolitan University: Margins vs MarkupsFormula rearrangement and conversion examples.

General business calculation information, not tax, accounting, or pricing advice.