# Profit margin

**Definition:** Profit margin is the share of a sale you keep as profit, shown as a percentage of the selling price. Gross margin is (price − cost) ÷ price × 100. Selling for 10,000 something that cost 7,000 gives a 30% gross margin: 3,000 of every 10,000 is profit before overheads.

Margin is measured against the selling price; markup is measured against the cost. The same 3,000 profit on a 7,000 cost is a 30% margin but a 42.9% markup, which is why mixing the two up leads to underpricing.

Gross margin ignores rent, salaries and other running costs. Net margin subtracts those too, so it is always lower. Watch both: a healthy gross margin can still hide a business that loses money once overheads are counted.

**Example:** Cost 7,000, price 10,000: margin 30%, markup 42.9%.

## Related

- [Profit margin calculator](https://profynix.com/tools/profit-margin-calculator)
- [Markup](https://profynix.com/glossary/markup)
- [Pricing calculator](https://profynix.com/tools/pricing-calculator)