What problem does this solve?
Distinguish profit, margin on sales and markup on cost, and calculate a price for a valid target margin.
Step by step in ViBytes Tools
- Enter cost and selling price.
- Set a target margin below 100%.
- Calculate and compare margin with markup: their denominators differ.
Worked example and how to check it
Input: Cost 80; selling price 100.
Expected result: Profit 20; margin 20%; markup 25%.
Common mistakes and decisions
Profit divided by sales gives margin; profit divided by cost gives markup. A 20% markup on cost 80 gives a price of 96 and about 16.67% margin, not 20%. A target margin of 20% on cost 80 requires a price of 100.
Limits before you continue
- Taxes and expenses not included in your cost are not added automatically. This is not net margin.
- At zero cost, markup and certain target prices are undefined; the interface shows that instead of infinity.
Frequently asked question
Does zero cost produce an infinite markup?
The interface marks it as undefined. Positive sales at zero cost have 100% margin, so a lower target has no corresponding price in this model.