The math that sinks small businesses

1. How much do you think you make?

You buy a product for $100 and sell it for $150. What is your profit margin?

2. The two numbers, side by side

Move the cost and the price and watch both calculations at once. Markup is (price − cost) ÷ cost; margin is (price − cost) ÷ price. The curve shows the margin each markup actually delivers:

3. Why margin never reaches 100%

Margin is a slice of the selling price — and no slice can be bigger than the whole pie. However much you raise the markup, the margin approaches 100% and never gets there. That is why the two numbers drift further and further apart:

Look at where the two meet: to get a 50% margin, the markup has to be 100%. Anyone applying "50% markup" believing they hold half in margin is actually holding 33.3% — a third less room than they think.

4. The discount that eats the profit

Here is the practical consequence, and it is brutal. At $100 cost and $150 price, your profit is $50. A 10% discount does not take 10% of the profit: it takes 30%, because the discount comes entirely out of your share — the cost does not move.

How much of the profit each discount takes away:

And to keep the same total profit after a 10% discount, you have to sell 42.9% more units. At 20% off, you need 150% more — two and a half times the volume for the same money in the till. This is the math that turns a sale into a loss.