Convert between markup and margin, and see the price and profit each one produces on the same cost.
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Markup price = cost x (1 + markup). Margin = (price - cost) / price. Price for a target margin = cost / (1 - margin). Markup is measured against cost, margin against price, which is why the same percentage gives two different numbers.
They use different denominators. Markup divides profit by cost, margin divides profit by price. A 50 percent markup on $1,000 is a $1,500 price and a 33.3 percent margin. To make a 50 percent margin you charge $2,000.
Price on margin, because margin is what covers overhead and profit as a share of the money that actually comes in. Marking up cost by your target margin quietly underprices every job, and the error grows with the margin.
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