Gross profit margin definitionQuestion What is the definition of gross profit margin?
Answer Gross profit margin is a pricing calculation managers use to produce a desired level of gross profit. Expressed as a percentage, gross margin is used in two ways: to price a unit of good or service sold; to demonstrate the gross profit performance of an operating period, such as a month or year.
Gross profit margin is calculated by dividing the cost of an item (or the total cost of goods sold for a period) by the selling price (or total sales for the period), and then subtracting that number from 1.0. Example: To calculate the gross profit margin for an item that costs $5 and sells for $9 ... 5 รท 9 = .56. Subtract .56 from 1.0 = 44% gross margin. Search again for the difference between margin and markup.
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