How to Add Margin to Cost

by Carter McBride ; Updated September 26, 2017
Small businesses need to focus on their margins to stay in business.

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.

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

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