Calculate Profit Margin
Margin vs Markup: What Indian Shopkeepers Need to Know
Most shopkeepers in India think in terms of markup: "I add 15% on top of my cost." But banks, investors, and accountants think in terms of margin: "What percentage of your revenue is profit?" Understanding both helps you price smarter and communicate better with anyone looking at your books.
Quick reference: Common margins for Indian retail
| Category | Typical Margin | Equivalent Markup |
|---|---|---|
| FMCG / Branded packaged goods | 8–12% | 9–14% |
| Fresh fruits & vegetables | 20–40% | 25–67% |
| Electronics & mobile accessories | 5–15% | 5–18% |
| Hardware & building materials | 10–20% | 11–25% |
| Medical / pharmacy | 15–25% | 18–33% |
| Clothing & textiles | 30–50% | 43–100% |
These are approximate gross margins. Net margins will be lower after rent, staff, and other operating costs.
Frequently Asked Questions
What is the difference between margin and markup?
Profit margin is profit divided by selling price (e.g. ₹20 profit on ₹100 sale = 20% margin). Markup is profit divided by cost price (e.g. ₹20 profit on ₹80 cost = 25% markup). Same profit, different percentages. Margin is always lower than markup for the same transaction.
What is a good profit margin for a kirana shop?
Most kirana shops operate on 5-15% net profit margin. Branded packaged goods (FMCG) typically have 8-12% margin, while fresh produce and unbranded goods can have 20-40% margin. The key is volume - kirana shops make money on turnover, not individual margins.
How do I calculate MRP-based margin?
If you buy a product at ₹80 (distributor price) and the MRP is ₹100, your margin is (100 - 80) / 100 = 20%. Enter ₹80 as cost price and ₹100 as selling price in the calculator above.
Should I use margin or markup for pricing?
Margin is more useful for financial analysis (what percentage of revenue is profit). Markup is more useful for day-to-day pricing (how much to add on top of cost). Most Indian shopkeepers think in terms of markup ("main 15% upar lagata hoon"), but margin gives you the true picture.
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