Marginality is a fundamental concept of doing business

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Marginality (margin) is one of those terms that everyone who wants to successfully develop their business in the trade sector needs to know and understand. This indicator is so important because it allows you to measure the level of profitability, which directly affects the prosperity of the business.

What is marginality?
Marginality is a financial indicator that indicates the difference between the cost price of a product (production costs) and its final market price (the one that the consumer will pay). Translated from French, margin means "difference, advantage." It depends on a number of factors, in particular the level of inflation, pricing policy and competition. In fact, each company determines the amount of the markup itself.

Profitability is often considered a synonym for marginality, but this is a misconception. Profitability is an indicator that indicates the percentage of profit from the sale of a certain product.

What is marginality?

How to calculate margin?
Marginality is calculated in two ways, based on which djibouti email list t can be expressed in monetary (absolute margin) or percentage equivalent (relative). In the first case, the cost price of the product (P) must be subtracted from its price:

M = C – C
At the same time, in order to calculate the margin in percentage equivalent, you need to divide the difference between the cost of the product (C) and its cost price (C) by the price of the product (C), and multiply the result by 100:

M = (C – C) / C x 100
What does margin affect?
Calculating marginality requires not only defining indicators, but also further analysis, which will help to identify important aspects for further business strategy and timely adjustments. Among the nuances that can be identified and assessed in this way are:

Declining profitability.
The level of profitability of the enterprise and the influence of various factors on it.
Opportunities to make a profit on a particular type of product.
The amount of final profit.
Break-even point.
Ways to increase marginality
It is quite possible to increase the product marginality; there are several ways to do this. Among them:

Increasing sales volume. In order to implement this method, you can, for example, reduce the cost of products or use popular marketing moves.
Adjusting the volume of output of goods. This will help regulate costs.
Increasing customer loyalty to the brand. If the company is well-known among customers and has a high level of trust, it can afford to slightly increase the markup on the product without losing the number of consumers.
Ways to increase marginality

Types of goods based on margin level
Different products have different margins, and this must be taken into account before selling them. There are low-margin products - these are mass-market products that are in high and stable demand (for example, bread, washing powder, baby food). Medium-margin products are essential goods that are bought less often than from the previous group and that have a large markup (for example, seafood, gadgets, household appliances). In turn, high-margin products are goods that are bought for a special occasion or extremely rarely. This includes exclusive, branded, valuable items (for example, jewelry, outerwear, elite alcohol).