1. What is Margin Percentage?

Margin percentage is a financial metric that shows what percentage of the selling price is profit. It helps businesses determine pricing strategies and profitability.

2. How Does the Calculator Work?

The calculator uses the margin percentage formula:

Where:

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

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

3. Importance of Margin Calculation

Details: Understanding margin percentage is crucial for pricing decisions, financial planning, and assessing business profitability.

4. Using the Calculator

Tips: Enter the selling price and cost in USD. Both values must be positive numbers, with selling price greater than cost for positive margin.

5. Frequently Asked Questions (FAQ)

Q1: What's a good margin percentage?
A: This varies by industry, but generally 10-20% is considered good, while 5% might be acceptable in high-volume, low-margin businesses.

Q2: How is margin different from markup?
A: Margin is percentage of selling price that's profit, while markup is percentage of cost added to determine selling price.

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

Q4: Should I use gross or net margin?
A: This calculator shows gross margin. Net margin would subtract additional expenses like overhead and taxes.

Q5: How often should I calculate margin?
A: Regular calculation (monthly/quarterly) helps track profitability trends and make timely pricing adjustments.