Revenue minus cost of goods sold, as a percentage of revenue.
Gross margin measures how much of each sale survives making the product. It funds everything else — a business with thin gross margins has no room for marketing, payroll, or mistakes.
Formula: GM = (Revenue − COGS) ÷ Revenue × 100
Example: $500k revenue − $210k COGS = 58% gross margin.
FAQ
What is Gross Margin in simple terms?
Gross margin measures how much of each sale survives making the product. It funds everything else — a business with thin gross margins has no room for marketing, payroll, or mistakes.
How is it calculated?
GM = (Revenue − COGS) ÷ Revenue × 100. Example: $500k revenue − $210k COGS = 58% gross margin.