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.
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.