What is the profit margin defined as in retail?

The profit margin in retail is defined as the retail price minus the cost of goods sold. This concept focuses on the difference between how much a product is sold for and how much it costs to acquire or produce that product. Essentially, profit margin demonstrates how efficiently a retailer can manage its production costs relative to its selling price. A higher profit margin indicates that a retailer retains more money from each sale after covering the cost of goods, which is crucial for overall profitability.

Understanding profit margin is vital for retailers because it directly impacts decision-making around pricing, inventory management, and financial planning. By evaluating the profit margin, retailers can assess the viability of product lines and strategize how to maximize their profits.

The other options provided do not accurately capture the definition of profit margin. Revenue minus expenses refers to net profit, which encompasses all operational costs beyond just the cost of goods. Sales volume indicates the amount of product sold, while customer satisfaction relates to the customers' perception and experience but does not provide any insight into financial performance.