Margin-harming

Describing a factor, event, or action that reduces or erodes the profit margin of a business or financial activity. It signifies a negative impact on profitability, leading to lower returns on investment or reduced financial gains. This can stem from increased costs (e.g., materials, labor, overhead), decreased revenue (e.g., lower sales volume, price wars), inefficient operations, or a combination of factors. The extent of the harm can vary, ranging from a slight decrease in profit to significant losses.

Margin-harming meaning with examples

• The unexpected surge in raw material prices proved deeply margin-harming for the construction company. They had to absorb these costs, as increasing prices for current projects were simply not possible, reducing their profitability on several projects by nearly 10% and placing them in the red.
• Aggressive discounting during the holiday season, though driving sales volume, was ultimately margin-harming for the retail chain. They focused heavily on driving volume, and had significant price-slashing to incentivize purchases, leading to an ultimately lower overall profit compared to the previous year.
• Inefficient manufacturing processes, causing increased waste and defects, resulted in margin-harming consequences for the clothing manufacturer. The need for rework and the cost of wasted materials were both detrimental, leading to decreased efficiency in their production run as a whole, and causing a higher per-unit cost.
• The introduction of a new regulation requiring additional safety measures was predicted to be margin-harming for the small-scale food processing plant. The costly implementation and compliance, in addition to potential drops in production, posed a significant financial strain that they were ill prepared for.