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Retail & Allocation lesson

Gross margin

Every sale has a cost: the goods themselves. What's left is gross profit.

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About 5–10 minutes · no sign-up needed

The idea

Every sale has a cost: the goods themselves. What's left is gross profit.

Formulas

( Sales − COGS ) ÷ Sales × 100

Key points

Gross profitSales − Cost of goods.
Gross margin %Gross profit ÷ Sales × 100.
Not just salesA store with high sales and low margin can earn less than a smaller one.

Always look at margin next to sales. Discounts can buy sales and lose profit.

Practice

Try each one in your head first, then open the answer.

1. What is Vancouver's gross margin %?
($15,000 − $8,250) ÷ $15,000 × 100 = 45%
2. In D2, work out Toronto's gross margin %: (sales − cost of goods) ÷ sales, as a decimal.
=(B2-C2)/B2
3. What is Montreal's gross profit?
$9,000 − $5,850 = $3,150
4. Tap the store that keeps the biggest share of each sale as profit.
Vancouver, at a 45% gross margin.

Learn it by doing. This lesson is a short hands-on level on Bampaa: see it work, then build and write it yourself, with instant feedback.

Try this lesson free →
About 5–10 minutes · no sign-up needed