Explain the Difference Between Margin, Markup, and Profit

Most small business owners price their products using one of these measures without being certain which one, and the confusion leads to margins that look fine until the other costs land. This explains gross margin, markup, and net profit clearly, shows why confusing margin and markup is a common and expensive mistake, and uses a worked example with realistic numbers so the relationship between all three is obvious.

Explain the difference between gross margin, markup, and net profit for someone running or considering a small business, with worked examples using realistic numbers.

Cover:
1. Gross margin: what it measures, how to calculate it, and what a healthy gross margin looks like in different types of business
2. Markup: how it differs from margin, why confusing the two causes pricing mistakes, and how to convert between them
3. Net profit: what costs sit between gross margin and net profit and why the gap between the two often surprises first-time business owners
4. A worked example: use a single product with a realistic cost and selling price to show all three figures and how they relate to each other
5. The one number to focus on first: which of these three measures matters most in the early stage of a business and why

Note this is educational and not accounting advice.