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ROI vs Profit Margin: Which to Use

1 min read · Profit and numbers

ROI compares profit with what you paid. Margin compares profit with the selling price.

ROI

Profit ÷ cost. It tells you how hard your money works.

Margin

Profit ÷ selling price. It tells you how much of each sale you keep.

Example

Buy at $30, profit $27 on an $80 sale: ROI 90 percent, margin about 34 percent.

Which to use

Use both with a minimum dollar profit

High ROI on a $3 item still pays poorly for your time.

General information for resellers, not financial, tax or legal advice. Marketplace fees and policies change; check the current rules before you buy.

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