How to Define Margins

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In sales, margin is defined as ratio between the the selling price and the cost of a product. Determine the margin for goods or services with tips from a certified public accountant in this free video on business and accounting terms.

Part of the Video Series: Business & Accounting Terms
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Video Transcript

How do we define a margin? A margin is a fraction of some number usually, with reference to the sales of a good or service and the cost of delivering that good or service. If for instance, we sell something that we purchased for ten dollars for a price of twelve dollars, our margin is the difference between the selling price and the cost, two dollars in this case or one sixth.


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