Glossary · Business quality

Gross margin

Sales minus the direct cost of making the product, as a share of sales.

Why it matters

Shows pricing power at the product level. Software often keeps 70% or more; supermarkets about 25%.

How to read it

A falling gross margin can mean rising costs or price cuts to defend sales.

Related

Operating marginProfit from running the business, before interest and tax, as a share of sales.

In the Cluenex app, this explanation opens next to every gross margin figure, with the live reading for the stock you are looking at. Open it in Cluenex