1. What is Distributor Margin?

Distributor margin is the percentage difference between the revenue received from sales and the cost of goods sold. It represents the profit margin that distributors earn on the products they sell.

2. How Does the Calculator Work?

The calculator uses the margin formula:

Where:

• \( \text{Revenue} \) — Total sales revenue in USD
• \( \text{Cost} \) — Cost of goods sold in USD

Explanation: The formula calculates the profit percentage relative to the revenue, showing how much of each dollar earned is profit.

3. Importance of Margin Calculation

Details: Calculating distributor margin is essential for understanding profitability, setting pricing strategies, evaluating business performance, and making informed financial decisions.

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 valid results.

5. Frequently Asked Questions (FAQ)

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

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

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

Q4: What if my cost exceeds revenue?
A: If cost exceeds revenue, you're operating at a loss (negative margin). This indicates pricing or cost structure issues that need addressing.

Q5: How often should I calculate my distributor margin?
A: Regular monitoring (monthly or quarterly) is recommended to track performance, identify trends, and make timely business adjustments.