🔍 What is Profit Margin?
Profit margin is one of the most important metrics in business — it shows how much profit you earn from every rupee of sales. A higher margin means your business is more efficient and sustainable.
📈 Types of Profit Margins
- Gross Margin: Revenue minus cost of goods sold (COGS).
- Operating Margin: Profit after deducting all operational expenses.
- Net Margin: The final profit after taxes and interest.
🧮 How to Calculate Profit Margin
The formula for profit margin is simple yet powerful:
Profit Margin (%) = [(Selling Price - Cost Price) ÷ Selling Price] × 100
💡 Example:
If you sell a product for ₹500 and it costs you ₹350 to make, then:
Profit = ₹500 - ₹350 = ₹150
Profit Margin = (150 ÷ 500) × 100 = 30%
🚀 Why It Matters
Tracking profit margins helps businesses understand which products are performing well, where costs can be optimized, and how pricing strategies affect the bottom line. A healthy margin keeps your business profitable even during tough times.
⚙️ Calculate Instantly
Use our free Profit Margin Calculator to instantly find your product’s margin and optimize pricing in seconds!
🏁 Final Thoughts
Consistently reviewing your profit margins ensures your business remains efficient and competitive. Combine smart pricing with regular cost reviews to maximize long-term profitability.
Written by Virat Chauhan
Founder of MyFinanceTools.org | Finance Enthusiast | Helping entrepreneurs grow smarter.