Gross margin is the difference between revenue and cost of goods sold divided by revenue.

Gross margin is expressed as a percentage.

Generally, it is calculated as the selling price of an item, less the cost of goods sold. Gross Margin is often used interchangeably with Gross Profit, but the terms are different.

When speaking about a monetary amount, it is technically correct to use the term Gross Profit; when referring to a percentage or ratio, it is correct to use Gross Margin. In other words, Gross Margin is a percentage value, while Gross Profit is a monetary value.

See COGS/COS, Revenue and Gross Profit.

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