What is profit margin?
Profit margin shows what percentage of the sale price is left as profit. It underpins pricing, campaign and discount decisions: without knowing your margin you can't see how much a discount or commission erodes profit.
Formulas
Gross profit = Sale price − Total cost
Margin (%) = Gross profit ÷ Sale price × 100
Markup (%) = Gross profit ÷ Cost × 100
Price for a target margin = Cost ÷ (1 − Target margin)
Example
Selling a ₺400-cost product for ₺650 gives ₺250 profit, a margin of 250 ÷ 650 = 38.5% and a markup of 250 ÷ 400 = 62.5%. For a 40% margin the price must be 400 ÷ 0.60 = ₺666.67.
Margin vs markup
| Markup (on cost) | Margin (of price) |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
Common mistake: adding 30% to cost and assuming a 30% margin. A 30% markup only yields about a 23% margin.
What belongs in cost?
- Purchase or production cost
- Shipping and packaging — desi calculator
- Payment and marketplace commissions — commission calculator
- Advertising / acquisition cost per order
- Returns and shrinkage allowance
Enter every amount on the same basis (all net or all VAT-inclusive). For VAT use the VAT calculator.
Profitable pricing with Tecof
Instead of running numbers one by one, manage the business from one panel: Tecof brings your website, online store, payments (Tecof POS, iyzico, PayTR, Craftgate and bank virtual POS), shipping and campaign tools together. Generate your site from a prompt, refine it in Studio and publish on the free plan.
