Margin

Margin is the profit you keep from a sale after subtracting your cost. You can show it as an amount or as a percentage of the selling price.

Small businesses use margin to price products, review quotes and invoices, and track profitability. You can measure margin per item, per invoice, or for the whole business to see what really earns money.

The common margin types you’ll see:

• Gross margin: Sales minus cost of goods or services sold; shows the basic profitability of what you sell.
• Operating margin: Profit after operating expenses like payroll and rent; before interest and taxes.
• Net margin: Bottom-line profit after all costs, interest, and taxes.
• Contribution margin: Sales minus variable costs; helps decide which products cover fixed costs.