Margin and markup are not the same number

Margin is profit as a share of the selling price. Markup is profit as a share of cost. A 50% markup is a 33% margin, and pricing decisions made on the wrong one are how stores lose money while looking profitable.

How this is calculated

Profit is selling price minus every cost you enter. Margin divides that profit by the selling price; markup divides it by total cost. The break-even price is simply your total cost — sell below it and each order loses money.

Questions

Which one should I price on?
Margin, because it is the one that maps to your revenue line. Markup is useful as a quick mental multiplier at the buying desk, but never compare it against a marketplace commission rate — commission is charged on price, so it is a margin figure.
Should VAT be in these numbers?
Keep both cost and price VAT-excluded, or both VAT-included. Mixing the two is the single most common error and it silently inflates your margin by the VAT rate.

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