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Gross Margin - How to Calculate

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Definition:

Retail buyers calculate the gross margin by subtracting the retail price from what you are charging the retailer.

For example if you make a product that will sell for $9.99 at retail and you decide to selling it to the retailer for $6.00 per piece , the gross margin dollar is $3.99.

Gross Margin % is calculated by taking the $3.99 and dividing it by $9.99 which calculates out to approximately 40%.

When the buyer asks you "what is your gross margin" almost always they want the percentage number.

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