# Margin Calculator

Calculate the total profit and margin percent of a sold good given the sell price and initial cost to help determine the best sell point for your goods.

## Margin Formula

The formula for margin is fairly simple, but many often get confused on how to calculate it. Margin is calculated with the following:

Margin (%) = Gross Profit / Revenue of Goods Sold * 100

Where: Gross Profit = Revenue – Cost

For example, if you sell a good for \$100.00 and the good costs \$50.00 to make, your total profit is \$50.00 and your margin is 50%.

## Gross Margin Calculator

Margin is the term used in business that refers to the revenue generated after accounting for costs of good. Margin is often used as a measure of profitability or productivity in business.

How can a business use margin to understand productivity? It’s a simple equation, a greater margin = greater productivity. That’s because margin accounts for the total cost of goods as well as the revenue. A higher revenue and lower cost of goods will both lead to a higher margin, therefore, it can be equated to productivity.

This financial metric is important for driving decisions in a company. If margin starts to decline, business owners can look at the simple formula to get to the root cause.

For example, if a company recently changed suppliers for a certain material and they are getting those goods for cheaper, then margin should increase. If it is not, that means that the productivity is decreasing as the total costs of producing the final product has gone up. This could be due to a lower quality material or a change in processes.