Margin, markup and why the difference matters
Profit margin is the share of each sale you keep after covering the cost of the item — expressed as a percentage of the selling price. If you buy something for 60 and sell it for 100, your gross profit is 40 and your margin is 40%. Knowing your margin on every product tells you which lines actually make money and how much room you have to discount before a sale stops being worthwhile.
Margin is often confused with markup, and mixing them up quietly erodes profit. Markup is the profit expressed as a percentage of cost, not price. In the example above the markup is 40 / 60 = 66.7%, even though the margin is 40%. Markup is what you add on top of cost to set a price; margin is what you actually keep. This calculator shows both from the same inputs so you never confuse the two when pricing.
To use it, enter your unit cost and either your selling price or a target margin. The tool returns gross profit per unit, the profit margin percentage and the equivalent markup percentage. Play with the numbers to find a price that hits the margin your business needs — most healthy retail and service businesses aim for gross margins well above their overheads so there is enough left to cover rent, wages and tax.
Remember that gross margin is before overheads. Your net margin — what is left after rent, salaries, marketing and tax — is lower, so price with enough gross margin to absorb those costs and still profit. Tallium tracks the true cost and margin of every product and service as you trade, so you always know which lines are pulling their weight without exporting to a spreadsheet.
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