Gross margin

Gross margin is an ambiguous phrase that expresses the relationship between gross profit and sales revenue. The ambiguity arises because it can be expressed in absolute terms:

Note: "Cost of goods sold" are the costs directly linked to the product, variable costs, e.g. costs for material and labour. They do not include fixed costs like office expenses etc. The gross margin shall be covering fixed costs and possibly a (net-) profit.

Larger gross margins are generally good for companies, with the exception of discount retailers. They need to show that operations efficiency and financing allows them to operate with tiny margins.