How to Calculate Margin Percentage

Your margin percentage is a direct reflection on how well your business is performing. The higher your margin, the more profitable your business is. It’s a smart number to track and an easy calculation to perform if you follow these simple steps.

Things You'll Need

• Calculator
• Financial reports

Instructions

1. Select a time period, typically a month, quarter or year. All information you use from your financial reports should be from the same time period.

2. Add up all revenue generated by your business operations. This will give you your total Gross Revenue.

3. Add up all expenses related to your business operations. This number is your Total Expenses.

4. Subtract the Total Expenses from the Gross Revenue. This number represents your Net Profit.

5. Divide your Net Profit by your Gross Revenue. Multiply the result by 100 and you have your Margin Percentage.

Tips & Warnings

• You can categorize your margin to reflect different areas of your business, like sales or marketing.

• Don’t confuse Margin with Markup. They are both commonly used financial statistics, but they represent completely different things.

• See “Additional Resources” below for more tips and help on analyzing and increasing your Margins.

• Garbage in, garbage out. Your Margin is only as accurate as the numbers you use to calculate it.

Resources

• Read this Article in Spanish
• Build your margins with professional Marketing, Sales, and Business Development help from Eric Hiller Consulting.