Gross margin is the percentage of revenue that exceeds the cost of goods sold (COGS), calculated by subtracting COGS from total revenue and dividing the result by total revenue.
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Gross margin is the percentage of revenue that exceeds the cost of goods sold (COGS), calculated by subtracting COGS from total revenue and dividing the result by total revenue.
Gross margin is a key metric for assessing how efficiently a company is producing and selling its goods. It shows the portion of revenue that remains after covering the direct costs of production. A higher gross margin means the company retains more from each dollar of sales, which can be reinvested into growth or saved as profit.
Gross margin helps you evaluate whether your business can cover its direct costs and generate profit. By analyzing your gross margin, you can optimize pricing strategies, reduce costs, and improve production methods. For your business, a healthy gross margin enables better cash flow management, stronger profitability, and more opportunities for growth.
Buske Logistics is a Top 40 3PL with over 35 warehouses across North America, specializing in warehousing, transportation, and value-added services. We provide tailored logistics solutions serving major Fortune 500 companies.
Gross margin is critical because it directly impacts a company’s profitability and pricing strategy. By understanding this metric, businesses can optimize their production costs, adjust their pricing, and determine whether they are operating efficiently.
For example, in 3PL logistics and warehousing, maintaining a strong gross margin can allow companies to reinvest in their operations, such as upgrading technology, enhancing supply chain processes, or improving warehouse facilities, leading to higher efficiency and customer satisfaction.
