The Profit Margin system in Stardew Valley was introduced back during the Version 1.3 update. It's essentially a difficulty modifier for veteran players looking to add some flare to the normal Stardew Valley experience, but the Profit Margin modifiers affect some areas of the game, while others are left alone.
Stardew Valley has both high replayability value and appeal for keeping a save file going for a long time. This comes from how Stardew Valley has successfully implemented mechanics that change up gameplay from the regular vanilla experience. For example, more recently, the Version 1.5 update added both a Beach Farm layout as well as the Remixed Bundles at the Community Center. The Remixed Bundles add more difficult items that need to be donated, while the Beach Farm is a difficult layout because it doesn't allow players to put sprinklers in the sand. The Profit Margins are another way Stardew Valley players can make their playthrough more difficult.
Profit Margins can only be changed when the player starts a new save file. In the panel to the left, players can change the Profit Margin from Normal, which would be 100%, to 75%, 50%, or 25%. This affects how much the player can make by selling items. For example, if a player has their Profit Margin set to 50%, a Milk would now be worth 19 gold rather than the 38 gold it's worth in the vanilla game.
This means a lot more attention paid to budgeting, especially in the first year in Stardew Valley. The first year is, of course, the most difficult because the player starts out with little money, but must purchase seeds to get the farm going. Luckily, the Profit Margin also changes how much seeds and other products are bought for at the same scale. So in the vanilla game, after the second year, a player's profits will begin to grow exponentially, but adjusting the Profit Margins can flatten that curve to add a challenge.
The 25% level is considered the highest level of difficulty in Stardew Valley, so much so that the community doesn't recommend players tackle it on their own. With Stardew Valley's 1.3 update also came multiplayer, allowing friends to run the same farm together. Even for veteran players, 25% is known to be a nightmare, but might be a good challenge with an experienced group of friends.
Additionally, rewards coming from quests in Stardew Valley are not affected by the Profit Margin adjustment. This gives the player more incentive to complete quests as often as possible while spending time fishing becomes less valuable.
Stardew Valley is available now for Android, iOS, PC, PS4, Switch, and Xbox One.