An original worked example

40% markup is not 40% margin.

A percentage can sound reassuring while covering less of the job than you expected. The key is whether the percentage is measured against your costs or your selling price.

Markup starts from cost.

Suppose an order costs $100 to produce. A 40% markup adds $40, so you charge $140 before sales tax. Your profit before payment fees is $40. Divide $40 by the $140 selling price and the margin is 28.6%.

Margin starts from the selling price.

A 40% margin means keeping 40 cents of each pretax dollar after the costs included in the calculation. The remaining 60 cents must cover costs. With $100 in costs and no payment fee, the unrounded price is $100 ÷ 0.60 = $166.666… .

Payment fees change the answer again.

A percentage processor fee grows with the selling price. If the fee also applies to sales tax, include that in the equation. With a 40% target, a 2.9% + $0.30 fee, and no sales tax, a $100-cost order needs an unrounded pretax price of $100.30 ÷ (1 − 0.40 − 0.029), or approximately $175.66. Whole-cent item prices can push the final order price a little higher.

Use the number that matches your workflow.

HemMargin uses a target margin after the costs you enter and modeled processing fees. It does not guess your market price or guarantee that a customer will accept it. If the price feels too high, check the inputs and the workflow rather than silently dropping labor or setup costs.

Try your own numbers ↗