1. What is Selling Margin?

Selling margin, also known as profit margin, is a financial metric that shows what percentage of the selling price is profit. It's calculated by subtracting the cost from the selling price, then dividing by the selling price and multiplying by 100.

2. How Does the Calculator Work?

The calculator uses the selling margin formula:

Where:

• \( Selling \) — Selling price in USD
• \( Cost \) — Cost price in USD

Explanation: The formula shows what portion of each dollar in revenue is actual profit after accounting for the cost.

3. Importance of Margin Calculation

Details: Understanding your profit margin is essential for pricing strategies, financial planning, and business sustainability. It helps determine if your business model is viable and how pricing changes affect profitability.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's a good profit margin?
A: This varies by industry, but generally, a 10% margin is average, 20% is good, and 5% is low. Some industries like software may have much higher margins.

Q2: How is margin different from markup?
A: Margin is profit as a percentage of selling price, while markup is profit as a percentage of cost. A 50% markup equals a 33% margin.

Q3: Can margin be over 100%?
A: No, since cost can't be negative (in normal business), maximum margin approaches but never reaches 100%.

Q4: Why use margin instead of absolute profit?
A: Margin shows efficiency and allows comparison between businesses of different sizes or industries.

Q5: How often should I calculate my margins?
A: For most businesses, monthly margin analysis is recommended to track performance and spot trends.