Gross Margin

Last Updated: Jun 7, 2019

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Gross margin is a company's total sales revenue minus its cost of goods sold, or COGS, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations.

Generally, it is calculated as the selling price of an item, less the cost of goods sold (production or acquisition costs, essentially).

Gross margin (%) = Revenue - Cost of Goods Sold

                                                Revenue