Gross Margin

When talking about improving profitability, managing and increasing Gross Margins is key in order to achieve the financial success of your business. The only problem? Gross margins can be a challenging calculation to make, so let's make it as easy as possible for you.

 

Definitions

Before you dive into data analysis, let's ensure that we are on the same page.

       

Gross Margin	Gross Margin of all orders at this time, calculated by (Net Revenue - COGS) / Net Revenue * 100
Net Revenue	Net Revenue from all orders at this time calculated as Gross Revenue after Product Returns
PoP Growth	Growth rate of the net revenue against the previous period (PoP)

By default, revenue is excluding taxes, shipping revenues, and discounts. Although we highly recommend using our default definition, but you can modify the revenue calculation under Company Settings > Report Settings. Please note that this will trigger a complete re-import and recalculation of all your data.

Your gross margin and net revenues are shown as a color-coded combined chart followed by absolute figures:

With the activation of RX Forecast™ you will additionally receive three forecast scenarios for the coming months. To enable predictions, simply book the add-on Forecast Plus.

 

Use Cases

The gross margin is a popular and helpful ratio for assessing a company’s financial health and profitability since it shows the percentage of your Net Revenue that you actually keep as available income. In general, gross margin can provide great insights into different aspects of your company’s financial performance:

• The profitability and stability of your business
• Your ability to manage expenses
• Your pricing strategy
• Your potential raising funds

 

What You Need

For this report to work properly, the following data must be imported:

• Order ID
• Order Date
• Stock Keeping Unit (SKU)
• Items Sold
• Item Price
• Product Returns
• Product Return Dates
• Shipping Revenue
• VAT
• Discounts
• Cost of Goods Sold