How to Calculate Product Percent Margin

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A product percent margin indicates the profit percentage a company makes by selling a certain product. Understanding the product percent margin is critical to evaluating the profitability of selling a certain product. If the product percent margin is too low, the company may need to re-evaluate the product's sale to increase profit.

Things You'll Need

  • Calculator
  • Calculate the total cost of selling a certain product. This includes direct costs such as supplies and salaries, as well as indirect costs such as rent and utilities.

  • Divide the total cost by the number of products sold. This provides you with the cost per item.

  • Divide the cost of the product by its selling price.

  • Subtract Step 3's answer from the number "1."

  • Multiply Step 4's answer by 100. This provides you with the product percent margin.

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