Margin Calculator
Calculate your profit, margin, and markup.
Gross Profit
₹0.00
Gross Margin
0.00%
Markup
0.00%
Understanding Your Business Profitability
Profitability is the ultimate measure of a business's success. This margin calculator helps you understand three key metrics: gross profit, gross margin, and markup. Gross profit is the money left over after subtracting the cost of goods sold from your revenue. Gross margin shows this profit as a percentage of revenue, while markup shows it as a percentage of cost. Understanding these figures is essential for effective pricing strategies and financial health.
Frequently Asked Questions (FAQ)
What is the difference between margin and markup?
Margin and markup both measure profitability, but they are calculated differently. Margin is the percentage of revenue you keep as profit (Profit / Revenue). Markup is the percentage you add to your cost to determine the selling price (Profit / Cost). Markup will always be a higher percentage than margin for a profitable item.
How is Gross Profit calculated?
Gross Profit is the difference between the revenue (what you sold an item for) and the cost of goods sold (what the item cost you). The formula is: Gross Profit = Revenue - Cost of Goods Sold.
Why is calculating gross margin important for a business?
Calculating gross margin is crucial because it shows how efficiently a company is using its labor and supplies in producing goods or services. A higher gross margin indicates that a company is more profitable on each dollar of revenue.
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