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Gross margin is a business/accounting term that refers to a company’s total sales minus the cost of goods sold (COGS), divided by sales revenue, and the final number is expressed as a percentage. A higher the percentage means the company retains more on each dollar of sales.

For example, companies use gross margin to measure production costs versus revenue from sales.

Gross margin used in a sentence: We need to look at the gross margin to determine where we need to cut costs.

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