If a product costs you a dollar then a 25% markup takes the price to $1.25.
However, if you want a 25% profit margin, then you need to retail at $1.33. i.e. your profit, 33c, is 25% of your retail price. (33/133 = 0.25). Therefore your profit margin is 25%.
The $1.25 retail on a cost of $1 yields a profit margin of 20%.
This is a very simple statement thought - because the next question is "What do you mean by 'cost'?" Is the fully loaded cost, including overhead, G&A, etc etc... or just what you paid cash to get the product you're selling?

Citation: http://beginnersinvest.about.com/cs/...

The gross profit tells an investor the percentage of revenue / sales left after subtracting the cost of goods sold. A company that boasts a higher gross profit margin than its competitors and industry is more efficient. Investors tend to pay more for businesses that have higher efficiency ratings than their competitors, as these businesses should be able to make a decent profit as long as overhead costs are controlled [overhead refers to rent, utilities, etc.]
To calculate gross profit margin, use this formula:

Gross Profit
----------(divided by)----------
Total Revenue