Gross margin
relating gross profits to net sales
Gross margin, or gross profit margin, is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (e.g., production or acquisition costs, not including indirect fixed costs like office expenses, rent, or administrative costs), then divided by the same selling price. "Gross margin" is often used interchangeably with "gross profit", however, the terms are different: "gross profit" is technically an absolute monetary amount, and "gross margin" is technically a percentage or ratio.
Gross margin is a kind of profit margin, specifically a form of profit divided by net revenue, e.g., gross (profit) margin, operating (profit) margin, net (profit) margin, etc.
Purpose
The purpose of calculating margins is "to determine the value of incremental sales, and to guide pricing and promotion decision."
Percentage margins and unit margins
Gross margin can be expressed as a percentage or in total financial terms. If the latter, it can be reported on a per-unit basis or on a per-period basis for a business.
"Margin (on sales) is the difference between selling price and cost. This difference is typically expressed either as a percentage of selling price or on a per-unit basis. Managers need to know margins for almost all marketing decisions.
This brief starts where responsible research should: with the source description of “Gross margin” as relating gross profits to net sales. Everything that follows is an evidence route, not borrowed authority.
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The subject matters to the general reference register because the source frames it as relating gross profits to net sales. Its deeper value depends on whether names, dates, institutions and citations support that framing.
Vocabulary and entity names are the principal evidence signals here, because they determine the precision of every later search. The source revision retrieved here is dated Aug 25, 2026. The linked authority identifier is Q11157999. The Library of Congress control number is sh85081373. 1 of 1 selected statements include explicit references; 1 carry qualifiers and 0 use preferred rank.
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This entry incorporates text from “Gross margin” on English Wikipedia. Contributors are listed in the page history. Text is available under the Creative Commons Attribution-ShareAlike 4.0 License. Selected authority identifiers and statements are retrieved from Wikidata under CC0; their references and qualifiers remain part of the verification path.