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Finance
Gross Margin
The percentage of revenue left after subtracting the direct cost of goods sold — a quick look at product profitability.
Gross margin = (Revenue - Cost of Goods Sold) / Revenue × 100. It's different from net profit, which subtracts everything. High gross margins give businesses flexibility to invest in growth or weather tough times.
In online business, improving supplier deals or raising prices (carefully) can boost this number.
It's how much money you keep from each sale before paying for marketing, rent, or salaries. If you sell a hoodie for £40 that cost £15 to get, your gross margin is high and gives you room to grow.
Real world: A successful dropshipping or e-commerce store aims for healthy gross margins (often 40-60%+). Low margins mean you have to sell huge volumes just to cover other expenses. Tracking it per product helps you focus on winners.
💡 Strong gross margins are the foundation of a healthy business — they give you breathing room to build everything else.