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Gross Margin

In one sentenceThe percentage of revenue left after paying the direct costs of delivering your product or service.

What it means

Gross margin shows how profitable your core offer is before overhead. Software companies often have high gross margins; service businesses and physical products usually lower ones.

How to use it

FormulaGross margin = (revenue − COGS) ÷ revenue × 100%
Example: ($100,000 − $40,000) ÷ $100,000 = 60%

Related terms

Net Margin COGS Unit Economics ROAS

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