Gross margin
03 · ProfitabilityHow much remains after direct costs?
Gross margin is what is left of a sale after the direct costs of making or buying what you sold: materials, stock bought for resale, and the labour that goes straight into the work.
What to track
The formula
Revenue minus direct costs, divided by revenue, shown as a percentage.
Margin by product
Some products or services earn far more than others. Knowing which ones tells you where to push.
The trend
A margin that slowly shrinks often means supplier prices or discounts are creeping up unnoticed.
Review it monthly, and again whenever a supplier changes a price.