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Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs It is calculated by dividing net income by revenue The profit margin is mainly used for internal comparisons, because acceptable profit margins vary between industries

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About Gross Profit Margin A gross profit margin is the difference between sales and the cost of goods sold divided by revenue This represents the percentage of each dollar of a company's revenue available after accounting for cost of goods sold

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The relationship between high margin and high sales volume can be complex Definition Margin is the difference between the price of a product (or service) and its cost Very simply, if an item sells for $100, and it costs $75 to make, the margin is $25 Profit Margin Definition; About the Author

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