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How to Figure Out Your Margins

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This story appears in the April 2015 issue of Entrepreneur. Subscribe »

Q: How do I figure out my margins?

A: For decades, maybe even centuries, business owners were taught to shoot for a profit margin of 10 percent. I don’t know where that number came from, but I can tell you it’s meaningless. As evidence, consider that Amazon barely makes any profit, while Apple’s margins are in the 40 percent range. Both companies, as you know, are considered highly successful. 

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