Profit margin is easy. Trade profit margin is not.
The formula is simple.
Profit margin is typically expressed as a percentage of revenue after subtracting costs.
The hard part in import-export is not the math. It’s making sure the right costs hit the right deal, in the right currency, on the right date.
This guide gives you a repeatable template.
Step 1: Define your margin scope
Before calculating, decide what “profit” means for this deal:
- Gross deal margin: revenue minus landed cost
- Net deal margin: revenue minus landed cost minus deal overheads (bank charges, inspection fees, local transport, etc.)
Pick one definition and keep it stable across your business.
Step 2: Compute landed cost the same way every time
If you compute landed cost differently per deal, your margins cannot be compared.
Incoterms® rules exist to clarify cost/task responsibility boundaries, which is why landed cost must be computed from a structured list of cost lines tied to the commercial term.
Use this as your baseline method: /resources/how-to-calculate-landed-cost
Step 3: Normalize currencies (FX timing matters)
The same cost can produce different margins depending on when you convert it.
Operational rule:
- Convert each cost using a consistent “value date” (e.g., invoice date, payment date, or customs clearance date)
- Store the FX rate source and date so it’s auditable
If you do not do this, your month-end margin reviews will drift.
Step 4: Use a deal template (copy/paste proof)
Use a template with these columns:
- Deal ID
- Shipment ID (optional)
- Revenue (base currency)
- COGS / purchase cost (base)
- Freight (base)
- Insurance (base)
- Duty / taxes (base)
- Local charges (base)
- Bank charges (base)
- Other deal overhead (base)
- Total landed cost (base)
- Profit (base)
- Profit margin (%)
Example (illustrative)
Revenue: 100,000
Landed cost:
- Purchase: 70,000
- Freight + insurance: 5,000
- Duty/taxes: 3,000
- Local charges: 1,000
- Bank charges: 500
Total landed cost: 79,500
Profit: 20,500
Margin: 20.5%
Step 5: Add “variance notes” so you can improve
When a margin changes after shipment, it’s usually one of these:
- freight adjustments
- demurrage/detention
- duty reclassification
- credit note / claims
- FX rate differences
Record a short variance note per deal. This is what turns margin reporting into operational improvement.
How Tijara helps
Tijara gives trading teams margin clarity without spreadsheet drift:
- landed cost from structured cost lines
- audit-friendly FX normalization
- shipment-level rollups
- margin reporting that matches persisted records
If you want to run margin as a daily control loop, this is the workflow to standardize.