How to Calculate Profit Margin and Markup

Small business owners often confuse profit margin and markup. Both of these metrics help a business set prices and measure profitability, but it’s important to know the difference—and know how to calculate the two numbers.

How to calculate profit margin

Gross margin shows the revenue a company has left over after paying all the direct expenses of manufacturing a product or providing a service. Those direct costs are also called cost of goods sold (COGS).

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Comments (2)

  1. high-energy 3 weeks ago

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  2. The more you stir it the worse it stinks.

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