My Business Made Sales But No Money - The Profit Margin Truth
Last year I made $10,000 in sales. I thought I was rich. Then I checked my bank: only $1,200 left. Where did the money go? I didn't know my profit margin. I was selling a lot but earning a little.
Why Profit Margin Is More Important Than Markup
Markup is what you add to cost. Profit margin is what you actually keep from the selling price. Businesses live on margin, not markup.
How to Calculate Profit Margin
Formula: (Selling Price - Cost) / Selling Price x 100
Example: You sell for $100, cost is $70. ($100-$70)/$100 x 100 = 30% margin. That means from every $100 sale, you keep $30.
My Advice
Track it for every product on your phone. If your margin is under 20%, you are working for free. I use Income and Expense Tracker to see my margin instantly after each sale. It shows me which products actually make money.
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