Question 1

What is profit margin?

Accepted Answer

Profit margin is the percentage of revenue that remains after subtracting costs. Gross profit margin = (Revenue - Cost) / Revenue x 100.

Question 2

What is a good profit margin?

Accepted Answer

It varies by industry. Software companies often see 70-90% gross margins. Retail typically sees 25-50%. Service businesses usually fall between 50-75%.

Question 3

What is the difference between margin and markup?

Accepted Answer

Margin is calculated as a percentage of the selling price, while markup is calculated as a percentage of the cost. A 50% markup equals a 33% margin.

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