How to calculate profit margin
Profit margin tells you how much of each sale you actually keep. The formula is:
Example: a croissant costs you $2.00 and sells for $3.50. Your profit is $1.50, your margin is 42.9%, and your markup is 75%.
Margin vs markup — what's the difference?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. They're easy to confuse:
- A 50% markup is only a 33% margin.
- A 100% markup is a 50% margin.
Pricing off markup but thinking in margin is one of the most common ways small shops accidentally underprice.
What's a good margin for a café or small shop?
It varies by item, but food and drink often run 60–70% margins on the product itself (before rent, wages, and waste), while packaged goods can be much thinner. The point isn't a magic number — it's knowing your margin per item so you price with intent and spot the ones quietly losing you money.
Track it automatically
Calculating margin once is easy. Knowing it across every item, every day, as prices change — that's the hard part. TallyRun stores cost and price for each product, shows the margin as you set it, and records every sale so your real numbers are always one tap away.