1. What Is Margin %?

Margin percentage is a financial metric that shows what percentage of revenue has turned into profit. It measures how much out of every dollar of sales a company actually keeps in earnings.

2. How Is Margin % Calculated?

The calculator uses the Margin % formula:

Where:

• Gross Profit — Revenue minus cost of goods sold (COGS)
• Revenue — Total income from sales before any expenses

Explanation: The formula shows what proportion of revenue remains after accounting for the direct costs associated with producing the goods or services sold.

3. Importance of Margin %

Details: Margin percentage is crucial for assessing a company's financial health, pricing strategies, and operational efficiency. Higher margins generally indicate better profitability and cost control.

4. Using the Calculator

Tips: Enter gross profit and revenue in USD. Both values must be positive numbers, and revenue cannot be zero.

5. Frequently Asked Questions (FAQ)

Q1: What's a good margin percentage?
A: This varies by industry, but generally 10% is average, 20% is good, and 5% is low. Compare with industry benchmarks for meaningful analysis.

Q2: How is margin % different from markup?
A: Margin is profit as percentage of revenue, while markup is profit as percentage of cost. A 50% margin equals 100% markup.

Q3: Can margin % exceed 100%?
A: No, since gross profit cannot exceed revenue, the maximum possible margin is 100% (when COGS = 0).

Q4: What affects margin percentage?
A: Pricing strategy, production costs, economies of scale, competition, and product mix all influence margins.

Q5: How often should I calculate margin %?
A: Regular monitoring (monthly/quarterly) helps track performance trends and identify issues early.