Average retail margins range from 25-50% depending on the product category. Grocery stores often operate on margins as low as 1-3%, while specialty retailers and luxury goods can achieve margins of 50% or more. High-volume, low-margin or low-volume, high-margin are both viable strategies.

Margin is the profit as a percentage of the selling price, while markup is the profit as a percentage of the cost. A product bought for $10 and sold for $20 has a 50% margin but a 100% markup. Margin is always lower than markup for the same transaction.

Discounts directly reduce your margin since they lower the selling price while costs remain fixed. A 20% discount on a product with a 50% margin drops the margin to 37.5%. Always calculate the post-discount margin to ensure promotional pricing remains profitable.