Calculate a Profit Margin

The profit margin is the profit made based on the selling price of an item.

For example, for a garage that:

• has sales of one million dollars 
• has a profit of one hundred thousand dollars 

we would say it has a 10% profit margin.

Margin calculation: (Selling-Costing)/ Selling

To calculate the selling price from the cost based on a % margin:

Selling price formula: Cost/(1-Margin)
e.g. An item with a cost of $100 sold at a 40% margin will sell for $166.66.

• Selling = 100/(1-0.4) = $166.67
• Margin = (166.67-100)/166.67 = 40%.

By using GEM-CAR, you'll always be sure that the margin is correctly calculated in your management and billing software.