Sales Margin Calculator
Your business will likely Need at least 30% Sales Profit Margins to cover Overhead, and expenses, just to break even.
There is a difference in sales margins vs sales mark-up.
A mark-up of 100% on a product would be buying it for $1, and selling it for $2.
This same sale would have 50%Profit Margin, because half of the $2 you made would be profit.
So, in short mark-up uses the original cost as the main focus, while sales Margin focuses on the percentage of Profit you made on the sale.
If you are competing in a saturated market, unless you can SIGNIFICANTLY differentiate your business from others, you will likely only be able to price your product or services at a similar price point and sales margins in comparison to others.
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Physical Product Business Margin
Physical Product Sales margins range anywhere from:
10%, on high volume, low cost, highly saturated markets, that are direct to consumer products.
Up to 70-90% for companies who have cornered their market like De Beers has on Diamonds.
The average for most physical products today is somewhere between 25-50% Sales Margins, depending on the industry and whether you are an OEM,Wholesaler,or Distributor.
Physical Service Business Margin
Physical Service Sales Margins range anywhere from:
25-30% on every day services with many competitors like- dry cleaning, lawn maintenance, pool maintenance, home plumbing and electrical work, and other trades.
Up to 70-90% for services like staging homes for sales, being a nanny, or personal training.
The Average Sales Margin for Physical Service Based Businesses is between 35-60%, depending on what equipment is needed for the service and how skilled the labor needs to be to perform it correctly.
Digital Product/ Service Business Margin
Digital Product/ ServiceSales Margins range much higher in general, because they dont require the same reinvestment of capital to purchase, maintain, or manufacture more products to sell. They usually require much more time and capital at the beginning of the business, but run at much higher sales margins once the product/service is built because of how much faster they can scale and how inexpensive it is to reproduce. These types of businesses have Sales Margins that run on average between 70-90%.