What is Gross Margin?
Gross margin is the difference between revenue and COGS, as a percentage. With the median e-commerce net profit at 3%, this number determines viability.
Formula
Example
If you had $10,000 in net revenue (after returns and discounts) and COGS of $4,000, gross margin = (($10,000 - $4,000) / $10,000) × 100 = 60%.
Margyn calculates CM1 and CM2 contribution margins alongside gross margin, at the product level.
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Related Terms
COGS (Cost of Goods Sold)
COGS is the direct cost of products sold: purchase price + inbound shipping + duties. The landed cost is the number you actually need to know.
Net Margin
Net margin is the profit percentage remaining after all costs (COGS, ads, shipping, operations). The e-commerce median is just 3% — every percentage point matters.
Contribution Margin
Contribution margin shows how much a product "contributes" toward covering fixed costs after all variable costs are deducted. The evolved version of margin.
Net Profit
Net profit is total revenue minus all costs (COGS, ads, shipping, wages, taxes, everything). The "true" bottom line — what's actually left.