BakeCostDeeStart with profit
Both measures require a cost and a selling price. If a product costs 60 and sells for 100, the profit is 40 before any costs that were not included.
Margin uses selling price
Profit margin asks what share of selling price remains after the included cost. It helps explain how much of every unit of revenue is left under the same costing boundary.
Markup uses cost
Markup asks how far the selling price is above cost, measured against cost.
Why a 40% target can produce two prices
With a cost of 60, a 40% markup produces a price of 84. A 40% margin produces a price of 100 because the formulas use different reference points.
| Target | Price formula | Result from cost 60 |
|---|---|---|
| 40% markup | 60 × (1 + 0.40) | 84 |
| 40% margin | 60 ÷ (1 − 0.40) | 100 |
A statement such as “we need 40% profit” is incomplete until it identifies margin or markup.
Check the cost boundary first
A percentage is only as useful as the cost behind it. If cost excludes packaging, labour, overhead, waste, or a sales-channel fee that your bakery intends to count, the result can look stronger than the business result. Review recipe cost per serving before selecting a target.
A platform fee creates another scenario
A percentage fee taken from selling price reduces the revenue your bakery receives. Recalculate profit and margin from revenue after that fee instead of applying the standard in-store margin without checking it.
Summary
- Margin: profit divided by selling price
- Markup: profit divided by cost
- The same percentage does not produce the same selling price
- Name the measure whenever you discuss a target