# Gross Margin

*Accounting & Reporting — Finicade finance glossary*

Gross margin is revenue minus cost of goods sold, as a percentage of revenue — what's left to cover everything else. It's the cleanest single measure of pricing power and business model: software runs at 70–90%, supermarkets at 20–30%, and those numbers barely move across cycles. A falling gross margin is more alarming than a falling net margin, because it points at the product rather than at overhead.

**Formula:** `Gross margin = (Revenue − COGS) ÷ Revenue`

**Also known as:** gross profit margin, gross profit

**Related terms:** [Cost of Goods Sold](https://finicade.com/glossary/cost-of-goods-sold), [Operating Margin](https://finicade.com/glossary/operating-margin), [Net Profit Margin](https://finicade.com/glossary/net-profit-margin), [Contribution Margin](https://finicade.com/glossary/contribution-margin), [Economies of Scale](https://finicade.com/glossary/economies-of-scale)

**Taught in:** Charter Climb — The Income Statement

Source: https://finicade.com/glossary/gross-margin