Profit is simply your price minus your cost. Markup measures that profit against your cost, so a $40 item sold for $100 carries a 150 percent markup. Margin measures the same profit against your price, which makes it 60 percent. Because price is always larger than cost, the margin percent is always the smaller of the two, and mixing them up is one of the most common pricing mistakes.

Use the price from margin and price from markup modes to set a number that hits the profit goal you have in mind. These figures cover a single item and do not include overhead, taxes, or fees, so treat them as a clear starting point for your pricing decisions.