2 min read
Definition
Gross margin = (revenue − cost of goods sold) ÷ revenue, as a percentage. It shows the profitability of your core product or service before overheads.
In plain terms
It is how much of each sale is left to cover the rest of the business, once you have paid for making that sale. A falling gross margin quietly erodes everything below it.
Why it matters for your company
Watching gross margin over time reveals pricing and cost pressure early. See reading your profit and loss and the gross margin calculator.
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