Small Business Accounting

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1. ObservedJul 14, 2026Conversation2 turnsPlacementAfter turn 12 turns · After turn 1Replay chat
   Observed conversationJul 14, 2026 · interface recreation

   ChatGPTArchived view

   I have a product with MRP 3665 and profit margin is 10%, what is the purchase price

   If the profit margin is 10%, that means:

   • Selling Price (MRP, assuming sold at MRP) = ₹3,665
   • Profit = 10% of Selling Price
   • Purchase Price (Cost Price) = 90% of Selling Price

   Calculation:

   • Cost Price = 3,665 × 0.90 = ₹3,298.50

   Answer: ₹3,298.50

   If, instead, you meant 10% markup on cost (rather than a 10% profit margin), then the purchase price would be:

   • Cost Price = 3,665 ÷ 1.10 = ₹3,331.82

   These two terms are often confused, so if you tell me whether your 10% is margin or markup, I can confirm the correct figure.

   

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   you are wrong, isn't it Cost price = MRP / (1+(margin*100))

   The difference comes down to what you mean by margin.

   There are two common definitions:

   1. Markup (profit as % of cost price) Formula: [ \text{Selling Price} = \text{Cost Price} \times (1 + \text{markup}) ] So: [ \text{Cost Price} = \frac{\text{Selling Price}}{1 + \text{markup}} ]

      For your example: [ \frac{3665}{1.10} = 3331.82 ]

   2. Profit Margin (profit as % of selling price) Formula: [ \text{Margin} = \frac{\text{Profit}}{\text{Selling Price}} ] Therefore: [ \text{Cost Price} = \text{Selling Price} \times (1 - \text{margin}) ]

      For a 10% margin: [ 3665 \times 0.90 = 3298.50 ]

   So your formula,

   [ \text{Cost Price} = \frac{\text{MRP}}{1 + 10%} ]

   is correct if "10%" refers to markup, not profit margin.

   If your business says, "We keep a 10% margin," many people actually mean a 10% markup in everyday usage, even though technically "margin" and "markup" are different.

   So for MRP = ₹3,665:

   • 10% markup → Cost Price = ₹3,331.82
   • 10% profit margin → Cost Price = ₹3,298.50

   Which definition does your business use?

   

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