Vyavsay School
← Glossary

Gross margin

What is left from a sale after the direct cost of what was sold, before rent, wages and other running costs.

If you sell something for a price and it cost you less to make or buy, the difference is your gross margin on it — often given as a percentage of the price. It is the money each sale contributes towards everything else the business pays for.

A thin gross margin cannot be fixed by selling more; it has to be fixed in the price or the cost. It is the number to check first when a busy business is not making money.

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See also: Net profit, Break-even