1. What is Distributor Margin?

Distributor margin represents the percentage difference between the revenue earned from sales and the cost of goods sold. It indicates the profitability of distribution operations and helps businesses understand their financial performance.

2. How Does the Calculator Work?

The calculator uses the margin formula:

Where:

• \( Revenue \) — Total sales revenue in USD
• \( Cost \) — Total cost of goods sold in USD

Explanation: The formula calculates the percentage of revenue that represents profit after accounting for the cost of goods.

3. Importance of Margin Calculation

Details: Margin calculation is crucial for distributors to assess profitability, set pricing strategies, make informed business decisions, and compare performance against industry benchmarks.

4. Using the Calculator

Tips: Enter revenue and cost values in USD. Both values must be positive numbers, and revenue should be greater than or equal to cost for meaningful results.

5. Frequently Asked Questions (FAQ)

Q1: What is a good distributor margin?
A: Typical distributor margins range from 15-30%, but this varies by industry, product type, and market conditions.

Q2: How is margin different from markup?
A: Margin is calculated as (Revenue - Cost)/Revenue, while markup is calculated as (Revenue - Cost)/Cost. Margin shows profit percentage of revenue, while markup shows profit percentage of cost.

Q3: Should I include operating expenses in the cost?
A: This calculator uses cost of goods sold. For gross margin calculation, use only direct product costs. For net margin, include all operating expenses.

Q4: What if my cost exceeds revenue?
A: This indicates a loss situation where the margin would be negative, meaning you're selling below cost.

Q5: How often should I calculate margin?
A: Regular margin analysis (monthly or quarterly) helps track performance and identify trends in your distribution business.