1. What is Margin Percentage?

Margin percentage is a financial metric that shows what percentage of the selling price is profit. It's calculated by subtracting the cost from the selling price, dividing by the selling price, and multiplying by 100.

2. How Does the Calculator Work?

The calculator uses the margin percentage formula:

Where:

• Selling Price — The price at which the product is sold (in £)
• Cost — The cost to produce or purchase the product (in £)

Explanation: The formula shows what portion of each pound of revenue is actual profit after accounting for costs.

3. Importance of Margin Calculation

Details: Margin percentage is crucial for businesses to understand profitability, set pricing strategies, and make informed financial decisions. It helps compare profitability across different products or services.

4. Using the Calculator

Tips: Enter both selling price and cost in British pounds (£). The selling price must be greater than zero, and cost cannot be negative. The calculator will display the margin as a percentage.

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 low and 30%+ is excellent.

Q2: How is margin different from markup?
A: Margin is percentage of selling price that's profit, while markup is percentage of cost added to get selling price.

Q3: Can margin percentage be over 100%?
A: No, since cost can't be negative, maximum margin is 100% (when cost is £0).

Q4: Why use percentage instead of absolute profit?
A: Percentage allows comparison between products of different price points.

Q5: How often should I calculate margin?
A: Regularly, especially when costs change or when introducing new products.