There are 2 ways that you might want to use margin in a business: gross margin and profit margin.
1. Gross Margin: Gross margin is the difference between the sales price of an item you are selling and its cost to you.
Suppose you are making a dress to sell. The cost for materials and labor to make the dress is $15.00. You sell the dress for $25.00. The gross margin is $10.00. In terms of percent it is ((25-15)/25)x100 or 40%.
2. Profit Margin: Profit margin is similar, but usually applied on broader level. It is net income divided by net sales.
If your clothes making business has an income after costs of $15,000 for total sales of $50,000, then your profit margin is (15,000/50,000)x100 or 30%.
