1. What is Margin?

Margin is the difference between the selling price of a product or service and its cost price. It represents the gross profit made on each sale before accounting for other expenses.

2. How Does the Calculator Work?

The calculator uses the margin formula:

Where:

• Selling price — The price at which the product is sold to customers
• Cost price — The cost to produce or acquire the product

Explanation: The formula calculates the absolute profit amount in currency units from each sale.

3. Importance of Margin Calculation

Details: Calculating margin is essential for businesses to understand profitability, set appropriate pricing strategies, and make informed financial decisions.

4. Using the Calculator

Tips: Enter both selling price and cost price in the same currency units. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between margin and markup?
A: Margin is the profit as a percentage of the selling price, while markup is the profit as a percentage of the cost price.

Q2: Can margin be negative?
A: Yes, negative margin occurs when cost price exceeds selling price, indicating a loss on each sale.

Q3: How is margin percentage calculated?
A: Margin percentage = (Margin / Selling price) × 100

Q4: Why is margin important for businesses?
A: It helps determine pricing strategies, assess product profitability, and make production/sales decisions.

Q5: What's considered a good margin?
A: This varies by industry, but generally higher margins indicate more profitable products.