1. What is Margin Percentage?

Margin percentage is a key financial metric that shows what percentage of the selling price is profit. It's calculated by dividing the profit (selling price minus cost price) by the selling price and multiplying by 100.

2. How Does the Calculator Work?

The calculator uses the margin percentage formula:

Where:

• Selling Price — Final price at which the product is sold
• Cost Price — Original cost of the product

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

3. Importance of Margin Calculation

Details: Margin percentage is crucial for pricing strategies, financial analysis, and business profitability assessment. It helps determine if a business model is sustainable.

4. Using the Calculator

Tips: Enter both selling price and cost price in the same currency. Selling price must be greater than cost price for a valid result.

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% is typically the minimum for sustainability.

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

Q3: Can margin percentage be more than 100%?
A: No, since cost can't be negative, maximum margin is theoretically 100% (when cost is zero).

Q4: Why use margin instead of absolute profit?
A: Margin percentage allows comparison across different products and price points.

Q5: How often should I calculate margin?
A: Regular margin analysis (monthly/quarterly) helps track business health and pricing effectiveness.