profit margin

USAGE SUMMARY

"profit margin" is correct and usable in written English.
You can use it to refer to the difference between the total income and total costs of a business. For example, "The company's profit margin increased significantly over the past year."

✓ Grammatically correct

Formal & Business

News & Media

Science

Human-verified examples from authoritative sources

Exact Expressions

60 human-written examples

Their profit margin?

The Economist

Profit Margin Analysis.

Stanford University

The profit margin.

The New York Times

Its efficiency is its profit margin.

The New Yorker

"And that's unadulterated profit margin".

The New York Times

Its profit margin is high.

The Washington Post

But that's probably the ISP's profit margin.

Massachusetts Institute of Technology

That's a pathetic 1.4-percent profit margin.

The New York Times

Is a fair profit margin 5percentt?

The New York Times - Magazine

I was defending a proper profit margin.

The New York Times - Food

Dean Hachem lost his profit margin.

The New York Times

Expert writing Tips

Best practice

Use "profit margin" in conjunction with specific time periods (e.g., quarterly, annually) to provide context for the financial data being analyzed.

Common error

Avoid using "profit margin" and markup interchangeably. "Profit margin" is a percentage of revenue, while markup is the amount added to the cost to arrive at the selling price. Using markup instead of "profit margin" changes the mathematical implications and represents a mistake for those who analyze balance sheets.

Linguistic Context

The phrase "profit margin" primarily functions as a noun phrase. Ludwig AI validates its use in sentences to describe the profitability of a business. It quantifies the percentage of revenue remaining after deducting costs.

Expression frequency: Very common

Frequent in

News & Media

37%

Formal & Business

33%

Science

30%

Less common in

Wiki

0%

Encyclopedias

0%

Social Media

0%

Ludwig's WRAP-UP

In summary, "profit margin" is a commonly used and grammatically correct noun phrase referring to a key indicator of a company's profitability. According to Ludwig AI, its use is validated by numerous examples across formal and news contexts. While it is a professional term, it's important to differentiate between gross, operating, and net "profit margin" for clarity. Common mistakes include confusing it with markup. Alternative phrases like "profitability ratio" or "return on sales" can be used depending on the specific context. This term is widely used in business, news and scientific domains.

More alternative expressions

Phrases that express similar concepts, ordered by semantic similarity:

gross profit margin

Specifies that it's the profit margin before deducting operating expenses and other costs.

net profit margin

Indicates the profit margin after all expenses, including taxes and interest, have been deducted.

operating profit margin

Refers to the profit margin from a company's core business operations, excluding items like interest and taxes.

profitability ratio

Broader term that encompasses various metrics used to assess a company's ability to generate profits relative to revenue, assets, or equity.

return on sales

Focuses on the profit generated per dollar of sales, emphasizing efficiency in converting sales into profit.

markup percentage

Emphasizes the percentage increase from the cost of a product to its selling price, highlighting pricing strategy.

earnings margin

Focuses on the proportion of revenue that remains as earnings after accounting for all costs.

yield on revenue

Highlights the return generated from each unit of revenue, emphasizing revenue efficiency.

return on investment

Measures the profitability of an investment relative to its cost, offering a broader perspective on overall profitability.

cost-plus pricing

Focuses on the profit gained by adding a certain percentage to the final cost. It focuses on cost coverage rather than profit.

FAQs

How do I calculate the "profit margin"?

The "profit margin" is calculated by dividing net profit by revenue. For example, if a company has a net profit of $100,000 on revenue of $1,000,000, the "profit margin" is 10%.

What is a good "profit margin"?

A "good profit margin" varies by industry. Generally, a net "profit margin" of 10% or higher is considered healthy, but some industries have much lower averages. Always compare a company's "profit margin" to its competitors and industry benchmarks.

What's the difference between gross "profit margin" and net "profit margin"?

Gross "profit margin" is revenue less the cost of goods sold, divided by revenue. Net "profit margin" is net profit (after all expenses, including taxes and interest) divided by revenue. Net "profit margin" gives a more complete picture of profitability.

What are some alternatives to saying "profit margin"?

Depending on the context, you can use alternatives like "profitability ratio", "return on sales", or "earnings margin". These terms convey similar ideas but may have slightly different nuances.