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Gross Margin

The percentage of revenue left after the cost of goods sold.

Area
Accounting
In this area
51 terms of 257

Gross margin shows how much of each sale remains after direct product costs, before operating expenses. It is a core measure of pricing and sourcing health.

Because it depends on COGS, errors in landed cost or inventory valuation flow straight through to a misleading margin.

How it is calculated

Gross margin = (Revenue − COGS) ÷ Revenue

Expressed as a percentage of revenue.

Related terms

Cost of Goods Sold

COGS

The direct cost of the products a business sold in a period.

Landed Cost

The total cost of a product once it arrives, including freight, duties and fees.

More in Accounting

Accounts Payable (AP) Accounts Receivable (AR) Accrual Accounting Accrued Expense Aging Report Bad Debt Provision Balance Sheet Bank Reconciliation

Gross Margin is not just a definition here

Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 257 glossary terms describe things the platform actually does.

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