Margin and markup use different denominators

If revenue is 100 and cost is 60, profit is 40. Margin divides profit by revenue, giving 40%. Markup divides profit by cost, giving about 66.67%. The transaction is the same; the denominator differs.

A target margin of 40% cannot be achieved merely by adding 40% to cost. Divide a cost of 60 by 1−0.4 to get a price of 100. Adding a 40% markup gives a price of 84 and a margin of about 28.57%.

Decide whether your cost includes delivery, payment fees and expected returns. Use consistent cost definitions when comparing prices. Treat tax separately according to whether your revenue and cost figures include it.