Ask two shopkeepers what “25% profit” means and you may get two different prices. One means markup, the other means margin — and the difference is real money.
Markup: on top of cost
Markup is the profit as a percentage of what you paid.
Cost ₹400, markup 25% → selling price ₹500 (₹400 + ₹100).
Margin: out of the selling price
Margin is the profit as a percentage of what you sell for.
Selling price ₹500, profit ₹100 → margin 20%.
So a 25% markup is a 20% margin. If you aim for a 25% margin but price with a 25% markup, you earn less than you planned on every sale.
| Markup on cost | Margin on price |
|---|---|
| 10% | 9.1% |
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
Where GST fits
Work out your price before GST, then add the tax on top. GST you collect is not your income: it is owed to the government. If you price “inclusive” in your head and add GST again on the bill, the customer pays twice; if you price inclusive but forget to take GST out, your profit is smaller than it looks.
A simple routine
- Start from the purchase price, before GST you can claim back.
- Decide your markup.
- Let the selling price follow — and round it to a price that reads well.
- Charge the product’s GST rate on the bill.
In Billyng
Each product has a purchase price and a profit percentage; Billyng works out the selling price as a markup on cost, cut to the paise. Prefer a round price? Override it — the profit percentage updates to match, and stays put until you change something.