Profit margin

Profit margin measures how much of each sales dollar is profit, expressed as a percentage of revenue: margin = (price − cost) ÷ price × 100. It differs from markup, which is profit as a percentage of cost. Because the denominator is the selling price, a given dollar profit always produces a smaller margin than markup.

Example: An item costing $80 and selling for $100 has a profit margin of $20 ÷ $100 = 20%.