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Additional Details
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Rakhi | Can anyone explain in simple language what is the meaning of 'margin' and how to calculate it? |
It is 'costing' related. |
 |
 
jb1
 |
Yes it is costing related. you have a product that costs you 1.00 and you sell it for 2.00 your margin is 1.00 or 100%.what you actually make though is that 1.00 margin less whatever cost has been incurred.This brings you back to a net figure known as your GMROI IE G ross Margin Return On Investment or in common terms "the bottom line" |
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scorpionanand
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Margin is equal to Selling Price minus Cost of that particular product or service. |
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ed
|
Margin refers to "profit margin".
It "is" the difference of the selling price and the cost of goods.
The best mathematical formula in order to calculate the margin, by a percentage, below.
Once a "percent" of gross profit is determined, and we'll use a norm in many businesses of 40%.
If 40%=Profit Margin, then it follows that 60%=Cost.
This is the compliment of 100, which is the "Total Price", or the selling price.
So, we can divide the "Cost" by 60%, (.60) to arrive at the "Selling Price".
If the cost of goods, including freight, = $25.00, then divide $25.00 by .60 = $41.67. In business, this may be rounded to $41.99.
To prove the % of profit to be 40%, subtract the cost, (25.00), from the selling price,
(41.67)=$16.67.
Divide the margin, $16.67 by the selling price, 41.67=.40 or 40%.
If one saw a selling price on goods of $41.67, and knew that the margin, markup, was 40%, then one can determine the cost.
Again, by taking the compliment of 40% to 100%,= 60 %, then multiply the selling price by 60%.
At 41.67 X 60%= $25.00.
Now if the item was rounded up to 41.99, the calculation would be off somewhat. |
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wispercall
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it is the minimum amount allowed to exceed a certain point.
calculate depending on your cabaplities. |
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David M
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Margin is basically the difference between what an item costs you and the revenue you get back from it.
For example, if I sell a box of cookies for $5 and my cost was $3, the margin was $2 or 40% (cost divided by sell minus 1 to get the percent).
Hope this helps! |
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vishisht d
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margin actually means ur profit after u have made sellings equal to cost price of any product. once u have achieved that cut-off point, any extra sellings made by u would add up to ur MARGIN. |
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DC Bob
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(finance) the net sales minus the cost of goods and services sold.
WordWeb Dictionary. For the Free Edition go to the below URL.
That is my answer from Washington, D.C. |
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timthetexan
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A company's margin is the difference between the cost of their products or services and the sales price. This is the "profit margin". |
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