Margin
Margin is the profit on a sale: the selling price minus your costs. You can show it as an amount or as a percentage of the selling price, and use it to set prices, check profitability and plan discounts.
Main variants you may see:
- Gross margin: sales minus direct costs of the goods or services sold.
- Net margin: profit after all business expenses, shown as a percentage of sales.
- Contribution margin: sales minus variable costs, used for break-even and pricing decisions.
Quick example
If you sell for 100 and your cost is 60, the margin is 40. Margin % = 40/100 = 40%. Note: markup here would be 40/60 ≈ 66.7%, which is not the same as margin.
Margin is an internal figure; it usually does not appear on customer invoices. Do not confuse profit margin with the VAT margin scheme — that is a specific tax method for certain goods and works differently. If you price using markup (based on cost), remember it gives different percentages than margin (based on selling price).
