Gross Margin
Revenue minus cost of goods sold, expressed as a percentage of revenue.
What Is Gross Margin?
Gross margin measures how much money is left over from revenue after paying for the direct costs of producing goods or services. It doesn't include overhead, R&D, or marketing costs — just the core production economics.
Formula
Gross Margin = (Revenue - COGS) / Revenue × 100Why It Matters
Gross margin reveals the fundamental profitability of a company's products or services. Expanding gross margins indicate improving pricing power or falling production costs. Declining gross margins are often the first sign of competitive trouble.
Typical Ranges: Software: 70-90%. Consumer goods: 30-50%. Manufacturing: 20-40%.
Real Examples from Our Database
Based on the latest data in our system. Values may change.
Related Terms
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