Stocktoria
What Is Gross Margin?
Gross margin is the share of revenue left after the direct cost of making a product or delivering a service.
Gross margin = (revenue − cost of goods sold) ÷ revenue
A 60% gross margin means that of every $1 in sales, 60 cents is left to cover everything else — salaries, marketing, R&D, taxes — and still turn a profit.
How to read it
- High margins (50%+) — common for software and brands with pricing power.
- Low margins (under ~20%) — typical of retailers, distributors and manufacturers that compete on price.
- Rising over time is a quiet sign of a strengthening business (and one of the Piotroski checks); falling margins can signal price pressure.
Compare gross margin within an industry — it’s normal for a grocer and a software firm to look worlds apart. Below it sit operating margin (after overheads) and net margin (after everything), which Stocktoria also shows year by year on each company page.