First Margin

First Margin, also known as Initial Margin, is a key financial metric for retailers that represents the initial profit margin on products before any markdowns, discounts, or additional costs are applied. It is the difference between the cost of goods purchased and the initial selling price, expressed as a percentage of the selling price.

 

To calculate First Margin, you can use the following formula:

 

This metric is important for retailers because it provides insight into the profitability of their inventory at the point of purchase, before any sales activities. It helps retailers understand how much profit they can expect to make on an item sold at its full price. Maintaining a healthy First Margin is essential for covering operating expenses and achieving overall profitability. Retailers often track this metric to make informed decisions about pricing, promotions, and inventory management.