1. What Is Margin Percentage?

Margin percentage represents the percentage of revenue that exceeds the cost of goods sold. It measures how much profit is made on each sale after accounting for the cost of the product or service.

2. How Does The Calculator Work?

The calculator uses the margin percentage formula:

Where:

• Selling Price — Final price at which product/service is sold
• Cost Price — Original cost to produce/acquire the product/service
• Margin % — Profit percentage relative to selling price

Explanation: This formula calculates what percentage of the selling price is profit after covering the cost of goods.

3. Importance Of Margin Calculation

Details: Margin percentage is crucial for business profitability analysis, pricing strategies, financial planning, and determining the viability of products or services in the market.

4. Using The Calculator

Tips: Enter selling price and cost price in any currency. Ensure selling price is greater than cost price for valid results. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between margin and markup?
A: Margin is calculated as (Selling Price - Cost Price) / Selling Price, while markup is calculated as (Selling Price - Cost Price) / Cost Price.

Q2: What is a good margin percentage?
A: This varies by industry, but generally 10-20% is considered good, while 5-10% is average. High-margin industries can achieve 50% or more.

Q3: Can margin percentage be negative?
A: Yes, if the cost price exceeds the selling price, indicating a loss on each sale.

Q4: How often should I calculate margin?
A: Regularly monitor margins - monthly for established businesses, more frequently for new products or during pricing changes.

Q5: Does this include operating expenses?
A: No, this calculates gross margin percentage which only considers cost of goods sold. Operating expenses are not included in this calculation.