Profit Margin -- Apple Analogy

There are 2 types of Profit Margin, Gross Profit Margin and Net Profit Margin. Here's my analogy used to explain it to one of the graduates at MIP today:

I bought an apple at $0.60 and my staff sell it at $1.

So my gross profit is $0.40, hence the gross profit margin is $0.40/$1 * 100% = 40%.

I paid my staff $0.10 to sell that apple. So my net profit is actually $0.30. Hence, my net profit margin is $0.30/$1 * 100% = 30%.

I'm glad that it helps in her understanding. :)