Margin Calculator

Selling products online or in stores is no easy task, running a business is expensive and timely. Save some time and headache with our margin calculator that will tell you just how much you will need to sell an item for based on a desired margin you have in mind and the product's cost to you.

Required Information

Cost: Margin (%):

Results:

What it is

What is Margin?

Create Date: June 17, 2024

Last Modified Date: December 12, 2024

Margin, in terms of operating a business, refers to the rate of return you will receive or want to receive. For example, if you want to sell a product that costs you $5 for a 50% margin, you are saying you want to make 50% on top of the cost of your product, which would mean you need to sell it for $7.50. It is extremely important for a business to have margin goals they want to hit so they can remain profitable and not lose money per sale. Saving time and money by calculating and planning out the desired margin can lead to increased efficiency and help with the overall business.

How to Calculate Margin

If you are trying to properly price out your products, you may be basing your pricing on a specific margin percentage. You can use this calculate to calculate the sell price you should use based on your desired amount of margin and cost. The formula for calculating this looks like this:

An image of the formula used to calculate how much a product should sell for based on the desired margin percentage.

Where:

SP = Sell price

C = Cost

M = Margin

Understanding Your Results

When you hit calculate you will get two items displayed. The amount that you should be selling the product for and the profit. The selling price is exactly that. It is the amount you should sell your product for if you want to be selling it for your specified margin percentage. The profit is displayed to help you get a better understanding of what that margin percentage will get you per sale.

How to Use the Margin Tool

Product pricing is important for both the consumer and the wellbeing of a business. The margin can be crucial to the survivability of a brand. Using this tool can help you identify selling prices and more. To sue the tool you must:

Enter the entire cost of a product to you.

Enter the percent margin that you want to have for this product. Do not enter the percent symbol, simply the number itself.

Hit the calculate button and instantly get your results.

Calculation Example

We just started a new scooter brand and we need help finding the right price for one of our scooters. Landed, our scooter costs us a total of $42. We want to make at least 50% margin on this product. We can use this tool to find out the sell price we will need to use to get that margin. First, we will enter 42 into the cost field. Then, we will enter 50 into the margin field. Finally, we can hit calculate and learn that we must sell the scooter for $63 to make 50% profit on it. Per scooter sale, we will get a profit of $21, based on this cost and margin percent.

Margin - Frequently Asked Questions

Margin is extremely important when running a business. If you are not generating a high enough margin rate from your products or services you run the risk of not profiting enough to support the expenses you incur.

There are three main types of business margins:

Gross Margin: Calculates the percentage of revenue that exceeds the cost of goods sold.
Operating Margin: Reflects the percentage of revenue left over after all operating expenses are considered.
Net Margin: Shows what percentage of revenue remains after all expenses, including taxes and interest, have been paid.

Yes, a business can have a negative margin, which occurs when the costs of producing goods or services exceed the revenue generated from selling them. Negative margins indicate that a business is losing money on its sales, which could be unsustainable in the long term.

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