Profit margin example for a mobile app business plan

Lesson Details:

Video Transcription: Now I want to show you an example of how to add the profit margin section into your business plan and here's the actual formula you take your net profit divided by revenue and here are three examples and I'm going to usually in your business plan name we just have one in my business plan I have my profit of $65,000 here as you can see right the the issue is really whether I pay myself and how I decide to calculate that if I pay myself a salary for example fifty thousand then only fifteen thousand is actually business profit right in that calculation that is here and my profit is four percent which is not very good a typical business is you know you want to have a profit margin of 25 percent or more but at the same time this number of how much I pay myself is totally arbitrary if I pay myself less and the business gets more money then you can see that the business is immediately healthy and profitable and of course if I because I'm a single person intrapreneurs single person business I can just take all the profit and pay that myself then me that would make the business very very profitable in terms of in terms of the profit margin right calculation so in my case the calculation somewhat arbitrary but the formula what you have to take away at the end of the day is this formula and it's really simple as you can see is just arithmetic and you're done it's a complicated term profit margin it's it sounds complicated but it's really easy.