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Pricing & Margin

Set prices from your costs and target margin, and stop confusing markup with margin.

Charge at least

$33.33

Gross margin

40.0%

profit ÷ price

Markup

66.7%

profit ÷ cost

Where each sale goes

Cost $20.00
Profit $13.33
Common mix-up: a 40% markup is not a 40% margin. Marking up a $20.00 cost by 40% gives $28.00, a margin of only 28.6%.

Gross margin covers only direct costs. Your overhead and your own pay still come out of it.

Learn the thinking behind it