Finance and accounting
Margin
Profit on a sale, as an amount per unit or as a percent of price.
Facts checked against sources onWhat does Margin mean?
Margin can mean two things, so always say which. Unit margin is an amount: sell for 100, cost 60, and the margin is 40 per unit. Margin percent is that profit divided by the price: 40 ÷ 100 = 40%. Margin is measured against price; markup is measured against cost. The type of margin also depends on which costs you take out: gross margin, contribution margin, operating margin or net margin.
Where does it come up in case interview prep?
- Value chains and profit poolsLesson in How industries work: the toolkit
- Cost structures, margins and capital intensity across industriesLesson in How industries work: the toolkit
- Procurement and sourcing: where the money goesLesson in Sourcing, trade and supply risk
- Tariffs, trade agreements and rules of originLesson in Sourcing, trade and supply risk
- Supplier concentration and resilienceLesson in Sourcing, trade and supply risk
- The United States for case solversLesson in Regions for case solvers: the big markets of the world
- Brands, trust and pricing powerLesson in Why some businesses win: competitive advantage and the economics of strategy
- Cost leadership or differentiation: what must be trueLesson in Why some businesses win: competitive advantage and the economics of strategy
Related terms
- MarkupHow much you add on top of cost to set the price.
- Gross profit and gross marginRevenue minus the cost of goods sold, as an amount or a percent.
- Contribution marginRevenue minus all variable costs, as an amount or a percent of revenue.
- EBIT and operating profitProfit from operations, before interest and tax.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Fixed costA cost that stays the same when volume changes, within a normal range.
Learn it in context
See Margin at work in a lesson from How industries work: the toolkit, with checks as you go.
Spotted something wrong or out of date? Report a mistake. We check every report and correct the page.