The Margin Calculator is a tool that automatically calculates margin amount and margin rate when you enter selling price, cost, and fees. It can also calculate proper selling price or cost according to target margin rate. This calculator helps with various business decisions such as pricing, discount policy establishment, and profitability analysis.
Margin refers to the net profit calculated by subtracting cost from the selling price of a product or service. Margin can be expressed as an amount (margin amount) or as a percentage of the selling price (margin rate). Margin is an important indicator for evaluating business profitability and establishing pricing policies.
Margin is a key indicator for evaluating the health and sustainability of a business. Higher margins generally indicate better business profitability and provide flexibility to respond to unexpected cost increases or market changes. Setting appropriate margins is an important decision that balances price competitiveness and profitability.
Margin Amount = Selling Price - Total Cost (Product Cost + Fees)
Margin Rate (%) = (Margin Amount ÷ Selling Price) × 100
Margin and Markup are often confused concepts. Margin is calculated based on the selling price, while markup is calculated based on the cost. Even with the same selling price and cost, margin rate and markup rate have different values.
| Concept | Calculation Formula | Example (Cost $700, Selling Price $1,000) |
|---|---|---|
| Margin | Margin Rate (%) = ((Selling Price - Cost) ÷ Selling Price) × 100 | ((1,000$ - 700$) ÷ 1,000$) × 100 = 30% |
| Markup | Markup Rate (%) = ((Selling Price - Cost) ÷ Cost) × 100 | ((1,000$ - 700$) ÷ 700$) × 100 = 42.86% |
For example, if the product cost is $700 and the selling price is $1,000:
Margin Amount = $1,000 - $700 = $300, Margin Rate = ($300 ÷ $1,000) × 100 = 30%
This means that 30% of the selling price is pure profit. In other words, when sold for $1,000, the margin is $300.
| Industry | Average Margin Rate |
|---|---|
| Retail | 20~40% |
| Manufacturing | 15~30% |
| Service | 30~60% |
| Restaurant | 60~70% |
| IT/Technology | 70~90% |
※ These figures are for reference only and may vary depending on specific industry, region, company size, etc.
Calculate markup rate based on cost and find appropriate selling price.
Calculate break-even sales amount based on fixed and variable costs.
Calculate return relative to investment cost to evaluate investment efficiency.