Gross Margin

Gross Margin measures the percentage of net revenue remaining after deducting the direct costs associated with producing or delivering a company's products and services. It is calculated by dividing Gross Profit by Net Revenue.

Gross Margin provides a view of the underlying profitability of a company's products or services before operating expenses, interest, taxes, and other costs are considered.

A higher Gross Margin generally indicates that a greater share of revenue remains after direct costs to support operating expenses and generate profit. A lower Gross Margin indicates that direct costs consume a greater share of revenue.

Changes in Gross Margin can reflect shifts in pricing, customer or product mix, or the cost of delivering the company's products and services. Expanding margins indicate that Gross Profit is growing faster than Net Revenue, while contracting margins indicate the opposite.

MetricFrame calculates Gross Margin by dividing Gross Profit by Net Revenue for each period.