What is Gross Margin?

By Leanna Kelly When a company sells a product or offers a service, it needs to price it higher than it costs to produce it. That amount is the gross income a company earns from its sales. But it’s often simpler and more prudent to look at gross margin: gross income represented as a percentage of net sales. Why? Because gross margin offers an important look at production efficiency that’s easy to compare and contrast over time or against specific criteria.
The higher the gross margin, the more money the company retains from the sale of its products. This offers critical insight for …read more