1. What is Profit Margin?

Profit margin is a financial metric that shows what percentage of revenue has turned into profit. It's a key indicator of a company's financial health and pricing strategy in the UK market.

2. How Does the Calculator Work?

The calculator uses the UK margin formula:

Where:

• \( Revenue \) — Total income in GBP
• \( Cost \) — Total expenses in GBP

Explanation: The formula calculates what percentage of each pound earned is actual profit after accounting for costs.

3. Importance of Profit Margin Calculation

Details: Understanding profit margin helps UK businesses evaluate pricing strategies, control costs, and compare performance against industry benchmarks.

4. Using the Calculator

Tips: Enter revenue and cost amounts in GBP. Both values must be positive numbers, with revenue greater than zero for a valid calculation.

5. Frequently Asked Questions (FAQ)

Q1: What's a good profit margin in the UK?
A: This varies by industry, but generally 10-20% is considered healthy for most UK businesses.

Q2: How is this different from markup?
A: Margin shows profit as percentage of revenue, while markup shows profit as percentage of cost.

Q3: Should I use gross or net figures?
A: This calculator works for both - use gross figures for gross margin, or net for net profit margin.

Q4: How often should I calculate profit margin?
A: UK businesses typically calculate it monthly as part of regular financial reporting.

Q5: What if my margin is negative?
A: A negative margin means costs exceed revenue - immediate review of pricing or costs is needed.