AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
There is no official table of gross margins by trade in Nigeria, so any figure you see is an estimate. As labelled examples, high-volume provisions and building materials often run on thin margins (roughly 8% to 20%), while services and prepared food can run far higher (50% or more) because ingredient or product cost is a small share of the price. Your own margin, measured from your sales and your full landed cost, matters far more than any benchmark.
Owners often ask what margin a trade 'should' make. The useful answer is a range to sanity-check your own numbers against, plus a method for measuring yours accurately. The ranges below are illustrative examples prepared for this guide, not survey data or an official statistic. Use them to ask questions, not to set prices.
Example margin ranges by trade
| Trade | Example gross margin range | Why it sits there |
|---|---|---|
| Provisions and grocery retail | 10% – 20% | Price-compared goods, high volume, many competitors |
| Building materials (cement, rods) | 8% – 15% | Commodity prices known to buyers; bulk sales |
| Retail pharmacy | 15% – 30% | Mix of regulated, price-sensitive and branded lines |
| Phone accessories | 30% – 60% | Low unit cost, wide price spread, fashion element |
| Fashion boutique | 35% – 60% | Style premium, but markdown risk on unsold lines |
| Bakery | 40% – 60% | Ingredients a modest share of price; energy and labour are big but sit below gross profit |
| Restaurant or eatery (food cost only) | 55% – 70% | Ingredients only in cost of sales; staff, gas and rent below |
| Salon or barbershop services | 50% – 75% | Products used are a small share; time is the real cost |
Note the last three: a high gross margin does not mean a high profit. A restaurant can show a 65% gross margin and still lose money once rent, staff, diesel and gas are paid. See gross profit vs net profit.
Why margins in the same trade differ
- What counts as cost. One shop includes transport from the market in cost of sales, another does not. IAS 2 (paragraph 11) treats the purchase price, non-recoverable import duties and taxes, and transport and handling as part of the cost of stock, with trade discounts deducted.
- Buying terms. Buying direct from a manufacturer or distributor at volume can add several percentage points.
- Product mix. A pharmacy selling more cosmetics than generic medicines will show a different average.
- Shrinkage and waste. Theft, breakage and expiry quietly reduce real margin.
- Replacement cost. Pricing on old stock costs when supplier prices are rising flatters this month's margin.
On that last point, the NBS reported headline inflation of 14.63% and food inflation of 19.59% year on year for September 2026 (reported by Voice of Nigeria, 16 October 2026). Check the latest CPI release on the NBS website each month. With supplier prices moving, margins worked out on what you paid months ago can mislead you; see pricing groceries when costs keep rising.
How to measure your own gross margin
- Pick a period, ideally a full month.
- Count and value stock at the start and end of the month (see stock count procedure).
- Add up purchases for the month, including transport and handling into the shop.
- Cost of sales = opening stock + purchases + inward transport − closing stock.
- Gross profit = sales − cost of sales. Gross margin = gross profit ÷ sales × 100.
Worked example
Example only. A provisions shop: opening stock ₦2,400,000; purchases ₦9,600,000; transport to shop ₦300,000; closing stock ₦2,700,000. Cost of sales = ₦2,400,000 + ₦9,600,000 + ₦300,000 − ₦2,700,000 = ₦9,600,000. Sales for the month ₦12,000,000. Gross profit ₦2,400,000; gross margin 20%. If the owner had left out transport, margin would have looked like 22.5% (₦2,700,000 ÷ ₦12,000,000).
Margin by product group
A single shop-wide margin hides a lot. Split sales into a few groups and work out each one, because a change in what customers buy can move your overall margin even when no price changes.
Example only. A minimart sells ₦5,000,000 of soft drinks and water a month at a 12% margin (₦600,000 gross profit) and ₦3,000,000 of toiletries at 30% (₦900,000). Overall gross profit is ₦1,500,000 on ₦8,000,000, an 18.75% margin. If a hot month pushes drinks to ₦6,000,000 while toiletries stay flat, gross profit rises to ₦1,620,000, but the overall margin falls to 18% (₦1,620,000 ÷ ₦9,000,000). Nothing went wrong; the mix changed.
Knowing this stops you cutting prices or blaming staff for a margin dip that is really a mix effect, and shows which groups deserve more shelf space.
Using benchmarks sensibly
If your margin is well below the example range for your trade, look first at buying prices, shrinkage and whether prices have kept up with costs. If it is well above, check you are counting all costs of getting goods to the shelf. Track your own margin monthly by product group; the trend tells you more than any comparison. For setting prices from a target margin, see markup vs margin.
Where Pryme fits
A Pryme Business Account's Finance agent prepares work such as monthly summaries from your account activity for you to check and approve, which gives you a regular starting point for measuring margin.
Questions people ask
What is a good gross profit margin in Nigeria?
It depends on the trade. As illustrative examples, provisions often run 10% to 20% and services 50% or more. Compare your own trend over time rather than a single benchmark.
How do I calculate gross margin for my shop?
Sales minus cost of sales, divided by sales. Cost of sales is opening stock plus purchases and inward transport, minus closing stock.
Why is my margin high but I still make no profit?
Gross margin ignores rent, salaries, power and other overheads. A business can have a high gross margin and a net loss.
Should transport be included in cost of goods?
Yes. IAS 2 includes transport and handling directly attributable to buying stock in its cost, so leaving it out overstates your margin.
Sources
- IFRS Foundation: IAS 2 Inventories (2024 issued text) · accessed Oct 2026
- Voice of Nigeria: Nigeria's headline inflation drops to 14.63 per cent (NBS CPI, September 2026), 16 Oct 2026 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.