Gross margin

Revenue minus the direct cost of delivering the product or service, as a share of revenue. It shows how much of each sales dollar is left before running the rest of the business.

Simple example

A product sells for $100 and costs $30 to make and deliver. Gross profit is $70, so the gross margin is 70%.

Revenue $100Cost $30Gross profit $70Gross margin = gross profit ÷ revenue70 ÷ 100 = 70%Cost = making and delivering the product
Made-up numbers, for illustration only.