What Is Gross Margin and Why It Matters More Than Revenue
Revenue gets all the attention, but gross margin — what's left after direct costs — is usually the better indicator of whether a business is actually healthy.
How to calculate it
Gross margin equals revenue minus cost of goods sold, expressed as a percentage of revenue. It answers a simple question: of every dollar in sales, how much is actually available to cover overhead and profit?
Why margin matters more as you grow
A business growing revenue while margin shrinks is often growing itself into thinner and thinner profitability — a trend that's invisible if you're only watching the top line.
Tracking gross margin monthly, not just annually, catches pricing or cost problems early enough to actually fix them.
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