He was marking products up 40% and still couldn’t explain why profit felt thin.

Markup and true margin are two different numbers - his gap was 11 points wide.

A 40% markup sounds healthy until you do the actual margin math: that’s a 28.6% margin, not 40%. The TGM Calculator converts every markup he’d ever quoted into the true gross margin percentage sitting behind it, and stacked it against what his overheads actually needed to be covered. The number he thought he was running on wasn’t the number paying his bills.

Markup and margin are calculated off different bases - markup off cost, margin off sale price - and the gap between them widens the higher the markup gets, which is exactly the range most small business owners are pricing in without realising it. It’s not a trick question, it’s just two different numbers that sound like they should be the same one. Once he saw his real margin next to his real overhead percentage, it was obvious which products were actually funding the business and which ones were just moving stock.