What is gross margin?

Gross margin is the percentage of your sales left over after paying for the products you sold, before other costs like shipping, fees and ads.

How to calculate it

Gross margin = (net sales − cost of goods sold) ÷ net sales × 100

The amount in dollars, net sales minus COGS, is gross profit. The percentage is gross margin.

WooCommerce Analytics doesn't report gross margin, though Askshelf can calculate it from the cost saved on each order. In Analytics, you can get net sales per product from Analytics › Products, but you need a cost per product as well. That can come from the core Cost of Goods Sold feature (WooCommerce 10.3 and later, off by default), a plugin, or your own spreadsheet. Export the Products report with the Download button and add a cost column.

A worked example

Say a candle sells for $30 and costs you $9 to make.

• Gross profit per candle: $30 − $9 = $21
• Gross margin: $21 ÷ $30 × 100 = 70%

Now run it with a 20% coupon. The candle sells for $24, gross profit drops to $15, and margin falls to 62.5%. A 20% discount took almost 29% of the profit.

Why it matters

Margin tells you which products actually pay for the business. A best seller by revenue can be a weak earner if its margin is thin, and discounts hit margin harder than they look. Gross margin also leaves out shipping, payment fees and ad spend, which is where contribution margin comes in. Askshelf can report gross profit and margin, in total and per product, when Cost of Goods Sold is on. See gross margin by product and how discounts eat into margins.