✅ Understanding Profit Margin, Markup, and Selling Price (With Example Table)

When you run a business, knowing how to correctly price your products is essential. Two of the most common pricing metrics are profit margin and markup. Although people often mix them up, they are not the same thing.

Let’s break it down using the example above, where every product has a €40.00 buy cost.

✅ 1. Profit Margin %

Profit margin shows how much profit you earn as a percentage of the selling price.

Example:

Buy Price: €40.00
Profit Margin: 25%
Sell Price becomes €53.33
Profit earned: €13.33

Formula:

Sell Price = Buy Price / (1 − Profit Margin)

✅ 2. Sell Price

This is the final price you charge the customer after applying the profit margin.

You can see how the selling price increases as the margin goes up.
Example:

10% margin → €44.44 selling price
40% margin → €66.67 selling price
55% margin → €88.89 selling price

✅ 3. Profit Margin (in €)

This is the money you actually earn on each sale.

Example:

At 30% margin, you make €17.14 profit per item
At 50% margin, you make €40.00 profit per item

✅ 4. Markup %

Markup shows how much you’ve increased the price compared to your cost.
This is often confused with profit margin, but markup is calculated differently.

Formula:

Markup % = (Profit / Buy Price)

Example for €40 buy price:

Selling at €57.14 → Profit €17.14
Markup = 17.14 / 40 = 42.85%
But margin is 30%

So markup is always higher than margin for the same product.

✅ Why This Table Is Useful

This sheet helps business owners:

✔ Calculate selling prices quickly
✔ Compare profit under different margins
✔ Understand the difference between markup and margin
✔ Avoid underpricing products

Whether you sell coffee, electronics, clothing, or services—this table makes pricing simple and accurate.

Download excel file

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