To calculate sales margin is to calculate a business' effectiveness, efficiency, or profitable. This number gives you the reason for doing business. While you may love what you do, the question is" what are you generating? Sales margin may also be referred to as profit margin or gross margin. The number may also be calculated in dollars ($) or percentage (%). Let's do both. Sales margin $ =
. total sales - cost of goods sold, e.g. $1000 (sales) - $700 (cost) = $300 (sales margin $). Sales margin % = total sales - cost of goods sold divided by total sales, e.g. ($1000 (sales) - $700 (cost) = $300 (sales margin $)) / $1000 (total sales) = .30 or 30%. Now for some businesses this would be a phenomenal sales margin, e.g. retail or manufacturing. However, for other businesses, e.g. service-oriented industries, this might be mediocre. For more information: http://office.microsoft.com/en-us/products/HA101329551033.aspx.
