Margin Ratio Calculator
Calculate the margin ratio to evaluate your profit margin as a percentage.
Result
Calculation Steps
Buy-Sell Breakdown
Formulas
Margin Ratio Calculation
The margin ratio is calculated as follows:
Where:
- Sell Price: The price at which you sell the product
- Buy Price: The price at which you buy the product
Usage Notes:
- Results are rounded to 2 decimal places.
- Sell price must be greater than 0.
- A higher margin ratio indicates a better profit margin.
Example: If you buy at $50 and sell at $100, the margin ratio is (100–50)/100 × 100 = 50%.
How to Use the Margin Ratio Calculator
- Enter Buy Price: Input the price at which you bought the product.
- Enter Sell Price: Input the price at which you sold the product.
- Choose Display: Select standard, step-by-step, or chart view.
- Calculate: Click “Calculate” to process inputs.
- View Results: Review the margin ratio.
- Reset: Click “Reset” to clear fields.
Frequently Asked Questions (FAQs)
What is the margin ratio?
The margin ratio, also known as profit margin, measures how much profit you make as a percentage of the selling price. It shows what proportion of revenue is profit after accounting for the cost of goods sold.
How is the margin ratio calculated?
It is calculated by subtracting the buy price (cost) from the sell price (revenue), dividing by the sell price, and multiplying by 100: Margin Ratio = (Sell Price – Buy Price) ÷ Sell Price × 100.
What is a good margin ratio?
A higher margin ratio indicates better profitability. Industry benchmarks vary, but ratios above 30% are generally considered strong, while lower margins may suggest tighter profitability or higher costs.
Why is the margin ratio important?
The margin ratio helps businesses assess pricing strategies, control costs, and make informed decisions about product offerings and profitability.
Can buy or sell prices be negative?
Buy and sell prices should be non-negative for meaningful calculations. Negative values may indicate data entry errors.