Margin vs markup
Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. Buying at ₹600 and selling at ₹1,000 gives a ₹400 profit — a 40% margin but a 66.7% markup.
Formulas
- Profit = Selling price − Cost
- Margin % = Profit ÷ Selling price × 100
- Markup % = Profit ÷ Cost × 100
- Selling price for target margin = Cost ÷ (1 − Margin%/100)
- Discounted price = Price × (1 − Discount%/100)
Why margins matter for marketing
Your margin decides how much you can afford to spend acquiring a customer. Higher margins allow bigger ad budgets and faster growth. Use our ROAS calculator to find the break-even return your ads need.
What a discount really does to your profit
Take a product that costs ₹600 and sells for ₹1,000, for a ₹400 profit:
| Discount | Selling price | Profit | Change in profit |
|---|---|---|---|
| 0% | ₹1,000 | ₹400 | — |
| 10% | ₹900 | ₹300 | −25% |
| 20% | ₹800 | ₹200 | −50% |
A 20% festive discount halves the profit on each sale, so you would need to sell twice as many units just to earn the same.
GST reminder: calculate margin on your price before GST, because GST collected is not your income. Use the GST calculator to remove it first.
Connect margin to your ads
Your margin tells you what you can pay for a customer. Enter it in the ROAS calculator to find your break-even point.