What is Gross Margin?
The percentage of revenue left after the direct cost of what you sold.
Gross margin is revenue minus the direct cost of producing your product (materials, manufacturing), expressed as a percentage. Sell a shirt for $30 that costs $12 to make, and your gross margin is 60%.
It tells you how much money each sale contributes before overhead. High-margin businesses (software, digital products) have far more room to grow than low-margin ones (reselling, some retail).
It's one of the first numbers investors ask about, because it hints at how good the underlying business can become.
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.