Meaning of Margin

Simple definition

Margin is the difference between a product or service’s selling price and its production cost, expressed as a percentage or amount.

How to use Margin in a professional context

Businesses calculate margins to assess profitability and set competitive prices.

Concrete example of Margin

A product costs $50 to produce and sells for $100. The margin is $50 or 50%.

How is margin calculated?

Subtract the cost from the price, divide by the price, then multiply by 100.

What is the difference between margin and markup?

Margin is based on the selling price, while markup is based on the cost.

Why is margin important?

It shows how much profit is made relative to sales.
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