1. What Is Margin?

Margin is the percentage of the selling price that turns into profit. It shows how much out of every dollar of sales a company actually keeps in earnings.

2. How Does the Calculator Work?

The calculator uses the margin formula:

Where:

• Selling Price — Final price to customer (in dollars)
• Cost — Cost to produce or acquire the product (in dollars)

Explanation: The formula calculates what percentage of the selling price is profit after accounting for costs.

3. Importance of Margin Calculation

Details: Margin is crucial for understanding business profitability, pricing strategies, and financial health. It helps determine if prices are set appropriately to cover costs and generate profit.

4. Using the Calculator

Tips: Enter selling price and cost in dollars. Both values must be positive numbers, and selling price must be greater than cost.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between margin and markup?
A: Margin is profit as percentage of selling price, while markup is profit as percentage of cost.

Q2: What is a good margin percentage?
A: This varies by industry, but generally 10% is average, 20% is good, and 5% is low.

Q3: Can margin be over 100%?
A: No, since cost can't be negative, maximum margin is 100% (when cost is zero).

Q4: How does margin relate to profit?
A: Margin shows profitability per item sold, while profit shows total earnings.

Q5: Why calculate margin percentage instead of dollar amount?
A: Percentage allows comparison across products with different price points.