Retail Gross Margin Formula With a Phone Shop Example
Calculate margin from selling price and product cost before approving a discount.
By ElectroX Team
Margin and markup use different denominators. Confusing them can make a price look safer than it is.
## Work the numbers
If a device costs NPR 18,000 and sells for NPR 20,000, gross profit is NPR 2,000 and gross margin is 10% of selling price. Markup is about 11.1% of cost.
## Add the real deductions
Consider payment fees, delivery, installation, and discounts when evaluating the sale. Keep tax treatment consistent with your accounting records.
## Compare by category
A phone and an accessory may need different target margins. Review actual transaction data rather than setting one percentage for everything.
ElectroX purchase and sales records provide the cost and revenue context; verify the final profit definition with your accountant.
Cover photo by [Jakub Żerdzicki](https://unsplash.com/photos/a-calculator-sitting-on-top-of-a-pile-of-money-zR7nFjjIAWE) on Unsplash.