Sales Margin in Excel

Sales margin, also known as contribution margin, is the percentage of profit that a business makes from selling a product or service, with respect to the revenue. It is usually calculated on a per unit basis, and it indicates how much each unit sold contributes to the overall profitability of the business.

How to Calculate Sales Margin in Excel

To calculate sales margin in Excel, you need to have the following information:

• Revenue: The total amount of money that the business receives from selling the product or service.
• Cost of goods sold (COGS): The total amount of money that the business spends on producing or acquiring the product or service.
• Profit: The difference between revenue and cost of goods sold.

The formula for sales margin is:

Sales Margin=Profit​/Revenue ×100%

In Excel, you can use the following steps to calculate sales margin:

1. Enter the revenue and cost of goods sold data in two columns, such as B and C.
2. In another column, such as D, enter the formula =B2-C2 to calculate the profit for each unit. Drag the formula down to fill the rest of the column.
3. In another column, such as E, enter the formula =(D2/B2)*100 to calculate the sales margin for each unit. Drag the formula down to fill the rest of the column.
4. Format the sales margin column as percentage using the Number group on the Home tab.

Example of Sales Margin Calculation in Excel

To illustrate how to calculate sales margin in Excel, let us consider the following scenario:

• A bakery sells cupcakes for $5 each.
• The cost of ingredients and packaging for each cupcake is $2.
• The bakery sells 100 cupcakes in a day.

Using the steps above, we can calculate the sales margin for the bakery as follows:

The sales margin for each cupcake is 60%, which means that for every $5 of revenue, the bakery makes $3 of profit. The total sales margin for the day is also 60%, which means that the bakery makes $300 of profit from $500 of revenue.

Other Ways to Calculate Sales Margin in Excel

There are other ways to calculate sales margin in Excel, depending on the data and the format that you have. Here are some examples:

• If you have the total revenue and the total cost of goods sold for a period, you can use the formula =(revenue-COGS)/revenue*100 to calculate the total sales margin for that period.
• If you have the unit price and the unit cost of goods sold for a product or service, you can use the formula =(price-cost)/price*100 to calculate the sales margin for that product or service.
• If you have the sales margin and the revenue for a product or service, you can use the formula =revenue*sales margin/100 to calculate the profit for that product or service.
• If you have the sales margin and the profit for a product or service, you can use the formula =profit/sales margin*100 to calculate the revenue for that product or service.