The short answer is any profit margin is good!
The long answer really depends on long term planning, the size of your business and the markets you are competing in.
Long term planning - profits fund business expansion, new product development, new and current market development etc.
A good rule of thumb is to keep profits above at least 10% while investing in new product developement, research and developent and investment in staff. Remember short term cost cutting may boost profits in the short term but will serverly damage your business in the long term , reguardless of what the so called "business experts" say.
The key to profitaqbility is process effiecency, an inefficent process wastes money!
The waste may be inefficent use of labour ( so you are wasting staff hours which cost) waste of material ( direct costs) or being unable to compete for orders (lost revenue costs).
The best people to make you process as efficient as possible are the staff so never fail to invest in your staff.
15%
As much as you can get SUCKA!
Profit Margin ratio is the comparison of profit as a percentage of revenue and calculated as follows Profit Margin ratio = Net Profit/Revenue
A high profit margin is a good indication that a business is doing well, and has financial stability. This also shows that the company has good control over its costs in relation to its income.
Gross Profit Margin = Gross Profit/Revenues Net Profit Margin = Net Profit/Revenues
A profit margin you can live on.
Profit margin means the amount of profit you make measured in a percentage. This can include:Gross Profit marginNet Profit marginMarkup Profit margin
Gross profit = sales - cost of good sold Gross profit margin = gross profit / sales *100 Gross profit = 240000- 108000 = 132000 Gross profit margin = 132000/240000 *100 Gross profit margin = 55%
15%
As much as you can get SUCKA!
The margin should be around 10%.
Net Profit margin is an indicator of the profitability of an organization. This refers to the actual amount of profit the company makes after deducting taxes and operating expenses. All company's strive to attain a good or rather high net profit margin. A net profit margin is also an indicator of the ability of the organization to control cost and also a good pricing strategy.Formula:Net Profit Margin = (Net Profit (After Taxes)/ Revenue) * 100%Note: It is easy to confuse gross profit margin and net profit margin. Gross profit is the amount of money left after paying for the operating expenditure. Net profit is the amount of money left after paying for operating expenses as well as government taxes. This is the actual amount of profit that goes into your pocket.
A good profit margin for services is 15 to 25%. Selling goods along with the services can help offset profits can keep the business going.
25%
Profit Margin ratio is the comparison of profit as a percentage of revenue and calculated as follows Profit Margin ratio = Net Profit/Revenue
Gross profit and the contribution margin are both important factors for a business' accounting functions. The gross profit allows the company to keep track of its revenue compared to expenses. The contribution margin allows the company to track the sale price of their products in relation to their costs to manufacture them.
A high profit margin is a good indication that a business is doing well, and has financial stability. This also shows that the company has good control over its costs in relation to its income.