May 29, 2016

Average Profit Margin is 7.5% For 212 Industries

Apparently the public opinion is that businesses have a profit margin of 36%.     However the actual average profit margin for 212 industries is 7.5%.

I'm simply paraphrasing what is covered in the article The public thinks the average company makes a 36% profit margin, which is about 5X too high from the American Enterprise Institute.

This isn't the same as saying that the average business has a margin of 7.5% but that the average among industries is 7.5%.   But its useful to know that a lot of industries have lower margins.

That article got their data on industry margins from Yahoo's business site.

A lot of industries have low profit margins.     Grocery stores are at 1.4%.    Movie theatres are 1%.   It also includes those industries that are losing money (at least temporarily).      Oil and gas drilling and exploration is at -6.8%.       On the other hand there are industries that make pretty high profit margins.    Wireless communications is at 29.7%.   Real estate development is at 38.7%.      Regional Midwest banks made 24.1%.    Around the middle are things like restaurants at 7.5%, jewelry stores at 7.6% and multimedia and graphics software at 7.1%.

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