How to Add Margin to Cost

When selling merchandise, your goal is to make money. To make money, you need to sell your product for more than it cost to produce or purchase your product. The amount above the cost is known as the margin. This is the profit you make on selling each item. This is a very important calculation for your business if the business is to become profitable. The business needs to have a margin, but it is important to keep the margin reasonable or consumers will look elsewhere for the product.

Determine your margin percentage and add one to the margin. For example, assume your margin is 20 percent, so one plus 0.2 equals 1.2.

Find your total costs. In the example, assume your total costs are $500.

 

Multiply your total costs by one plus the margin. In the example, $500 times 1.2 equals $600.