Level 3 - Commercial terms you need to know – Profit Margin-L3B2 - CTYNTK

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Profit margin shows how much profit a business makes compared with its sales revenue. It is calculated by subtracting expenses from revenue, then dividing the profit by revenue and multiplying by 100. For example, £100 sales minus £75 costs leaves £25 profit, which is a 25% margin. A higher margin gives a business more flexibility to offer discounts or absorb costs, while a lower margin means spending must be controlled carefully. Salespeople should understand profit margins so they can price products, set discounts sensibly, and appear knowledgeable and trustworthy when speaking to customers.

Keywords

profit margin

sales revenue

business profit

pricing strategy

discounts