How it works
Margin and markup use the same profit but different bases. Margin is profit as a share of the selling price; markup is profit as a share of the cost. A 25% markup is only a 20% margin, a common source of underpricing.
To price for a target margin, divide the cost by (1 − margin). Adding the margin percentage to the cost gives a lower price than you intended.
Profit = price − cost
Margin = profit / price
Markup = profit / cost
Price for target margin = cost / (1 − margin)Worked example
An item costing ₹800 sold for ₹1,000 makes ₹200 profit: a 20% margin and a 25% markup. To earn a 30% margin on the same cost, price it at 800 / 0.70 = ₹1,142.86, not ₹1,040.