Definition
Profit margin
Profit expressed as a share of the SELLING PRICE. A 40 percent margin on a 100 dollar sale is 40 dollars, so the item has to sell for cost divided by 0.6, which is 166.67 dollars for a 100 dollar cost.
This is not the same as a markup, which is profit as a multiple of COST. A 40 percent markup on the same 100 dollar cost gives 140 dollars. Mixing the two up is the most common and most expensive pricing error a maker makes.
Tools that use this term
Profit Margin Calculator
See the difference between a margin and a markup on the same cost, and price from either one deliberately.
Retail Price Calculator
Set a retail price from a wholesale price using a shop multiple, and see the margin that leaves at each end of the chain.
Wholesale Price Calculator
Work backwards from the retail price to the wholesale price a shop needs, and check the profit at both.
Jewelry Pricing Calculator
Turn the cost of making one piece of jewellery into a break even price, a retail price and the wholesale and premium prices that follow from it.