Draft reference — content review pending
Gross Margin
The share of included revenue remaining after direct costs, expressed as a percentage.
Business question
What percentage of revenue remains after direct delivery costs?
Formula
Gross margin = (gross profit ÷ included revenue) × 100.
Calculation notes
Use the same revenue and direct-cost definitions as the gross-profit measure for the same reporting period.
Edge-case guidance
If revenue is zero, mark the margin as not meaningful rather than dividing by zero. Investigate unusual negative values before interpreting them.
Required data
| Input | Type | Status | Available source hints |
|---|---|---|---|
| Gross profitGross profit calculated with the agreed direct-cost policy. | Currency | Required | Accounting software · Excel |
| Included revenueRevenue for the same scope and reporting period. | Currency | Required | Accounting software · Excel |
Interpretation
Use gross margin to see how pricing, product mix, direct costs, and delivery economics affect the contribution available for operating expenses.
Caution
A higher margin is not automatically better if it results from underinvestment or excludes costs that should be treated as direct.
Implementation recommendation
Pair the margin trend with gross profit and revenue mix so changes can be traced to price, volume, mix, or cost movement.
Target guidance
Set the first target from a comparable historical baseline for gross margin, then adjust it for strategy, capacity, seasonality, data quality, and relevant market or regulatory context. Review the direction with the accountable business owner rather than treating any external benchmark as universal.