Business Pitch Dictionary by pitch.dog
Margins, break-even & unit economics · Core

Gross margin

Also called: gross profit margin, GM

ELI5

Gross profit divided by revenue.

Used in conversation

“The number is useful only if everyone calculates gross margin the same way.”

Pitch context

You will see “Gross margin” in financial models, budgets, board packs and investor materials when the discussion reaches margins, break-even & unit economics.

Why it matters: In margins, break-even & unit economics, different calculation boundaries, periods or accounting treatments can change the number and the decision.

Caution

Calculation, recognition and disclosure can vary by accounting framework, company policy and reporting context.

Connected terms

  • Contribution marginGross margin subtracts defined cost of revenue; contribution margin subtracts the variable costs defined for a decision or unit.
Sources & evidence · 4

Direct term-level sources and supporting source families.