The arithmetic, once
Add 35% to a cost of $10 and you get $13.50, of which $3.50 is yours — a margin of 26%, not 35%. To actually keep 35% of the price you have to sell at $15.38, which is a markup of 54%.
The conversion is margin ÷ (1 − margin), and the gap widens as you aim higher: a 50% margin needs a 100% markup.
Which one to think in
Margin, when you are deciding whether a job is worth taking: it answers "what share of this sale is mine". Markup, when you are setting a price at the bench from a cost you already know. The mistake is computing one and believing the other.
Why the gap hurts most on cheap orders
Marketplace fees and tax are taken from the price, not from your cost, so they come straight out of margin. A seller adding 20% on a platform that charges 10% plus a fixed fee per order is often working for the platform.