Calculate margin

With the Calculate Margin tool , you can quickly gain insight into the profitability of a product, service, or business. The margin shows what portion of your revenue is actually profit after costs have been deducted.

For entrepreneurs, margin is often a more important key performance indicator than just profit, because it directly shows how efficiently revenue is converted into profit.

What is margin?

The margin is the difference between revenue and costs, expressed as both a sum and a percentage.

Formulas:

• Gross profit = Revenue − Costs
• Margin (%) = (Gross profit ÷ Revenue) × 100

Why margin is important

A healthy margin:

• provides room for growth
• provides insight into pricing strategies
• helps with cost control
• prevents losses during scaling up

Margin is essential, especially for webshops and product sales.

Margin versus profit

Profit is an absolute amount. Margin is a relative percentage.

A low margin with high turnover can be riskier than a higher margin with lower turnover.

Examples

• Revenue: €100
• Cost: €70
• Gross profit: €30
• Margin: 30%

Who is this tool intended for?

• self-employed
• webshops
• retailers
• service providers
• starting entrepreneurs

Frequently Asked Questions

Is this inclusive of VAT? No, standard excluding VAT.

Can I use this per product? Yes, this is actually ideal per product.

What is a good margin? That varies by industry, but it is often between 20% and 60%.