There seems to be two formula to calculate a selling price.
The first formula that I came upon would be
Cost * (1+Margin) = Selling price Example : 10 * (1+0.25) = 12.5
However, a lot of people uses the following :
Cost / (1 - Margin) = Selling price Example : 10 / (1-0.25) = 13.33...
This gives a very different number.
As far as I know, the margin and selling prices can be anything you want for most products.
Also note that the second formula fails if you have a margin of more dans 100%.
My question is why is the second formula the most popular ? Is it only a gimmick to get a bigger price?
Am I missing something subtle at work here ?
Also, what should I do if the wanted margin is more than 100% ?