Margin is the amount of revenue generated from selling a product or service.
Also known as profit margin, it is typically used to analyze profits of each individual sale, rather than the entire business, to identify the products that are the most (and least) profitable.
- Gross profit margin is the percentage of revenue that exceeds a company's costs of goods sold. It is calculated by subtracting the cost of goods sold from revenue and dividing that number by revenue.
- Net profit margin is how much profit you generate once all operating expenses, interest, taxes, etc. have been deducted. This is a ratio of the company’s net profits to revenues.