What Is Gross Margin?
The percentage of revenue remaining after subtracting the cost of goods sold.
Detailed Explanation
Calculated as (Revenue - COGS) / Revenue. Gross margin indicates pricing power and production efficiency before operating expenses.
Example
A design agency with $200k revenue and $80k in direct costs has a 60% gross margin.
Why It Matters
Healthy gross margins ensure enough cushion to cover overhead and generate profit.
Related Resources
Related Metrics & KPIs Terms
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