Profit margin and markup are separate accounting terms that use the same inputs and analyze the same transaction, yet they show different information. Both profit margin and markup use revenue and costs as part of their calculations. A mistake in the use of these terms can lead to price setting that is substantially too high or low, resulting in lost sales or lost profits, respectively. There can also be an inadvertent impact on market share, since excessively high or low prices may be well outside of the prices charged by competitors.
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