Whether you're a small start-up or a large multinational corporation, understanding gross margin means having a reliable guide to moving forward in your commercial activities. This calculation helps companies in all sectors to understand the profitability of their products or services. By analyzing the percentage of net revenue you get to keep per sale after the cost of goods sold (COGS) is deducted, the gross margin provides a clear vision of opportunities and potential profits. Gross margin is much more than a simple mathematical formula: it's a strategic tool that informs, guides, and inspires effective, well-thought-out management!
Our gross margin calculation tool allows you to calculate the gross margin that you’ll be able to recover from the sale of a product or service in just one click. The formula for calculating gross margin is quite simple and often used in finance and accounting. Gross margin represents the difference between the sales revenue and the COGS, divided by the sales price, all multiplied by 100.
The formula takes the following data into account:
Gross margin is a performance indicator that must always be optimized to ensure that your company's sales are always profitable. But what are the key points to monitor in order to constantly improve your breakeven point?
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