Glossary
What is gross margin?
Gross margin is gross profit as a percentage of revenue, where gross profit is revenue minus the direct cost of the goods or services sold. It isolates pricing and direct costs from overheads, which is why a falling gross margin on steady revenue usually points to input costs, discounting or a change in sales mix.
Also called: Gross profit margin
Gross margin is read against the same business over time and against others in the same sector; a software business and a reseller have very different normal ranges. It sits at the top of the profit and loss, before rent, salaries not booked to cost of sales, software and marketing.
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