Use margin for the selling-price view
Gross margin is profit divided by selling price. It tells you how much of each rupee of revenue remains after the cost you included. It is often the clearer planning measure when comparing products or setting a target profitability level.
Use markup for the cost view
Markup is profit divided by cost. It tells you how much you have added over cost. It is useful when a buying team or trader works from a cost sheet, but a 30% markup is not the same as a 30% margin.
Build the right cost base
Do not use only the supplier purchase price if you also bear packaging, payment gateway fees, marketplace commissions, shipping, returns, labour or a share of overheads. Decide which costs your target margin must absorb, and document the assumption. A product can show a healthy gross margin and still lose money once operating costs are included.
Review after discounts
Promotional discounts reduce selling price first, so margin can fall much faster than the percentage discount feels. Before approving an offer, calculate the revised selling price, the gross profit in rupees and the revised margin. Use actual cost data after the campaign to improve the next decision.
Sources and further reading
This guide is a business-planning explanation, not accounting or tax advice.