Gross Margin

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Gross Margin is the profit resulting from deducting the cost of a good from its selling price. It should not be confused with mark-up. If a good with a cost of $75.00 is sold for $100.00, the gross margin is $25.00 or 25%. The mark-up is $25.00 or 33.3% (25/75).

Professional accountants and economists have many different ways of defining cost, however, that is not the thrust of this brief article.