Why a 30% target margin is not cost multiplied by 1.3
A target margin measures profit as a share of the selling price. Solving for that price requires division by one minus the margin, rather than applying the same percentage as a markup.
Profit margin and markup calculator →Write the target as an equation
Let cost be C, selling price P and target margin m. The relationship is (P − C)/P = m, which rearranges to P = C/(1 − m). With a positive cost, a 100% margin cannot be achieved at any finite price. This boundary explains why the calculator does not accept that target as an ordinary pricing input.
Check a thirty-percent example
For cost of 70 and a desired 30% margin, price is 70/0.70 = 100 and profit is 30. Merely adding 30% to cost produces a price of 91 and profit of 21. The resulting margin is 21/91, approximately 23.08%. The two approaches differ because markup uses cost as its base while margin uses the final selling price.
Recheck the actual selling arrangement
Platform charges, packaging, returns and promotions can reduce the profit ultimately retained. Decide which costs belong in the entered amount and handle sales tax under the applicable rules. The model does not determine whether customers will accept the price or predict sales volume. If you round the suggested price to a practical retail amount, enter that actual price again to see the margin it really produces.
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