1. What is a Margin Calculator?

Definition: This calculator determines the profit margin by subtracting the cost price from the selling price.

Purpose: It helps businesses and individuals calculate the gross profit earned on a product or service.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( M \) — Margin (currency)
• \( SP \) — Selling price (currency)
• \( CP \) — Cost price (currency)

Explanation: The simple subtraction shows the absolute profit amount before considering other expenses.

3. Importance of Margin Calculation

Details: Understanding margin helps in pricing strategies, profitability analysis, and financial decision making.

4. Using the Calculator

Tips: Enter the selling price and cost price in currency values. The selling price should be equal to or greater than the cost price.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between margin and markup?
A: Margin is profit as a percentage of selling price, while markup is profit as a percentage of cost.

Q2: Can margin be negative?
A: Yes, if selling price is less than cost price, it indicates a loss.

Q3: Is this gross or net margin?
A: This calculates gross margin before operating expenses.

Q4: How do I calculate margin percentage?
A: Divide margin by selling price and multiply by 100.

Q5: Why is margin important for businesses?
A: It helps determine pricing strategies and overall profitability.