Gross margin is the percentage of sales revenue remaining after subtracting the direct cost of the product or service sold. The formula is gross profit divided by revenue, multiplied by 100. It measures the share of each sale available to cover operating expenses and profit.
Quick reference for Gross margin
| Check | What it means for the transaction |
|---|---|
| Category | Pricing and profitability |
| Record to keep | Record the cost basis, currency, quantity, customer scope, effective period and approval behind the amount when they apply. |
| Do not infer | A price label alone does not establish margin, landed cost or the final invoiced amount. |
Gross margin and nearby terms
- Price floor: A price floor is the minimum selling price a business permits for a product, service, or transaction without additional approval.
