Margin

The difference between what you sell a product or service for and what it costs to provide, typically expressed as a percentage. Gross margin calculates (revenue - cost of goods sold) ÷ revenue, while net margin accounts for all expenses including overhead. For example, selling a digital course for $100 with $20 in platform fees and advertising yields an 80% gross margin. Understanding margins is fundamental to business sustainability, low margins require high volume to generate profit, while high margins provide flexibility. Digital products typically have 80-95% margins (minimal production costs), while physical products often see 30-60% margins. Margin improvements directly increase profitability.

Why it matters

Margin determines business viability more than revenue. Generating $100,000 revenue with 5% margins leaves $5,000 profit, while $50,000 revenue with 50% margins leaves $25,000. Focus on margin optimisation alongside revenue growth.