What is gross margin?

Gross margin — this is a profitability indicator of a product or business, which reflects the difference between revenue and the cost of goods sold or services. It shows how much money remains after covering direct costs of production or procurement.

Formula:

Gross Margin = (Revenue - Cost of Goods Sold) / Revenue * 100%

Example: if a product is sold for 1000 rubles, and its production cost is 600 rubles, the gross margin will be:

(1000 - 600) / 1000 * 100% = 40%

This indicator is important for assessing pricing efficiency and cost management.