"I buy it for 100 and sell it for 130, so my margin is 30%." The sentence sounds reasonable and is usually wrong.
You do not buy the same product at the same price all year. Rates move, suppliers raise prices, one batch comes in on a discount. The stock on your shelf may be left over from three different purchases, and the last purchase price is not the cost of the goods you sold.
That is why cost is calculated on an average: every new receipt updates the average against the quantity already on hand. What leaves stock on a sale is that average. Margin then rests on what the goods in your hand actually cost, not on a guess about the last invoice.
The second common mistake is treating cost as the goods value alone. If freight, customs and handling do not land on the product, your margin looks better than it is.
Kumpara's product profitability report shows, per product, the sale amount, the cost of that sale and the difference. On a product with variants each variant carries its own cost and its own margin — black size L and red size S are the same product but may not earn the same.
Most owners notice two things the first time they read it. First: the best seller is assumed profitable because its turnover is large, while its thin margin limits what it contributes. Second: a slow mover with a high margin may quietly be carrying the month.
With that in hand, pricing and discount decisions come from numbers instead of instinct — including the answer to "which product can I afford to discount".