Knowing what you actually make.
GROSS MARGIN
Selling price less direct costs, as a proportion of the price.
What each sale contributes before overheads.
NET MARGIN
What remains after everything, including overheads.
The figure that matters for the business.
WHY BOTH MATTER
A healthy gross margin with overheads too high still produces a loss.
WHAT TO CALCULATE PER PRODUCT
Gross margin, at least.
That tells you which items are worth selling.
WHAT PEOPLE DISCOVER
That their best-selling item has the worst margin.
Volume disguises it.
WHAT TO DO ABOUT LOW-MARGIN ITEMS
Raise the price Reduce the cost Bundle with higher-margin items Discontinue
WHAT TO CHECK
That your overall margin is enough to cover overheads and leave a profit.
WHAT A FALLING MARGIN MEANS
Costs rising, discounting increasing, or your mix shifting toward cheaper items.
All three need different responses.
