The Invezz margin calculator can help companies of all kinds determine their profit margin, based on a few key financial facts. Keep reading and you’ll learn how our margin calculator works, and how it can be a valuable tool for your business.
How to use our margin calculator
To use our margin calculator, follow these steps:
- Enter in the cost of the good or service being offered.
- Enter in either the revenue or profit acquired for the sale of that good or service.
- Our margin calculator will instantly tell you the profit margin you made on the sale, expressed in percentage terms.
How the margin calculator works
Our margin calculator takes the cost of the item or service you’re offering and the sales price of that item or service, then immediately tells you what your profit margin is on the sale. Keep in mind that the cost of that item or service may require multiple inputs, including the cost of labour, materials, and overheads.
Why should I use it?
There are several reasons why it’s important to know the size of your profit margins:
- First, you can compare your margins over time, to see if your company is becoming more or less efficient at turning a profit.
- Second, you can compare your margins to those of your competitors (especially if those figures are publicly available), letting you know how the efficiency of your operations stacks up against your rivals.
- Finally, once you know your profit margins, you can make numerous informed decisions, including raising or lowering the price of your offerings, and even whether or not you should try to expand your business.
What is profit margin?
Profit margin is a calculation that measures the level of profit that you earn on the sale of an item or service. You can calculate profit margin by finding your net profit as a percentage of your revenue.