What is Gross margin?
Finance & accounting. A plain-English definition for Australian business owners.
Gross margin is the percentage of revenue left after deducting the direct costs of delivering the product or service: gross profit divided by revenue.
It is not the same as markup, which expresses profit as a percentage of cost — a 50% markup equals a 33% gross margin, and confusing the two is one of the most common quoting errors in SME trades and retail. Gross margin is the clearest single indicator of pricing health, and tracking it by product line or job type usually reveals where the real profit lives.
In a connected back office this sits with the Finance hub, where Valont runs bookkeeping, managed payroll and bas & tax compliance for Australian SMEs as one team. The full definition set is on the glossary.
Talk to an Advisor
General information, not advice. For how this applies to your business, talk it through with a Trusted Advisor or start with the Business Health Check.