Gross profit margin is the percentage of revenue paid to you by customers that is yours to keep. You can reinvest gross profits in marketing and sales to help you grow your business.
Calculate your gross margin by subtracting your Cost of Goods Sold (COGS) from your revenue, then dividing the result by your revenue.
Knowing your Gross Margin will help you:
+ understand the scalability of your business model;
+ identify price points that maximise profit; and
+ improve cash flow management since you can put your gross margin towards other business costs.
LegalVision has created this free Gross Margin calculator to assist. Use it to input sales revenue and COGS to determine gross margin.
For legal assistance with your new business, LegalVision’s experienced startup lawyers can assist. Just call 0800 005 570.
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