What does a 20% margin mean?

A 20% margin is the profit margin of 20% of the selling price. It is calculated by subtracting the cost price from the selling price and then dividing it by the selling price.

For example, if a product costs ₹80 to produce and is sold for ₹100, the margin would be ₹100 - ₹80 = ₹20. The margin percentage is ₹20/₹100 x 100 = 20%.

This means for every ₹100 in sales, there is a gross profit of ₹20 that covers overhead expenses and net profit. A 20% margin is typically considered an acceptable baseline profit margin for consumer products.

A higher margin is more favourable, allowing more room to operate sustainably. Retail margins in India tend to be between 20% and 50% before accounting for expenses. Food services tend to have tighter margins of 5% to 20%. Use the margin calculator to help you find the margin before you begin trading.