Margin Formula:
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Margin is the difference between revenue and cost, representing the profit earned from a business activity. It's a key financial metric used to assess profitability.
The calculator uses the simple margin formula:
Where:
Explanation: The calculation subtracts all costs from the revenue to determine the net profit.
Details: Margin analysis helps businesses understand their profitability, make pricing decisions, and identify cost-saving opportunities.
Tips: Enter revenue and cost in dollars. Both values must be positive numbers. The calculator will display the margin (profit) amount.
Q1: What's the difference between margin and markup?
A: Margin is profit as a percentage of revenue, while markup is profit as a percentage of cost.
Q2: What is a good margin percentage?
A: This varies by industry, but generally a 10% net margin is average, while 20% is considered good.
Q3: Should I use gross or net figures?
A: This calculator can be used for both - gross margin uses direct costs only, while net margin includes all expenses.
Q4: How often should I calculate margin?
A: Regular calculation (monthly or quarterly) helps track business performance over time.
Q5: Can margin be negative?
A: Yes, negative margin means costs exceed revenue, indicating a loss.