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calculating profit margin

    • 2 posts
    November 7, 2011 12:14 PM EST

    hello,

    im curious how others define their 'net profit margin' on their product.

    let says for example i sell my product X at $100.

    it costed me $50 to purchase - so i refer my gross profit as $50.

    but there are only a few other costs such as shipping it to the customer ($10)

    and a misc cost associated with each time i sell this product ($10).

    i want to say my 'net profit' on product X is  $30 ($100-$50-$10-$10=$30)

    BUT. the last thing i did not yet include is the storage unit of $500/mth which supports this product.  

    Do others still say my net profit is 30% ($30/$100 x 100) or how do you factor something like rent into this?   I felt like just saying "ill add another $10 cost to each product for rent".. but then it depends on the number i sell..

    for example. if i factor in $10 cost for rent on each product,

    the 'net profit margin' on Product X is $20 (if i sell product X under 50 times this mth) and the profit margin would be $30 if i sold over 50 times covering the rent.. 

    Hopefully i was clear with the confusion i am facing!  

    Would greatly appreciate any clarification on this topic. THANK YOU IN ADVANCE!