Formula
Margin = (price - cost) / price; Markup = (price - cost) / cost
Why it matters
It sets the ceiling on how much you can spend to acquire a customer and is the input for break-even ROAS.
Glossary // G / Accounting
What is Gross margin?
Definition
Gross margin is the share of revenue left after the direct costs of making and delivering a sale, calculated as revenue minus direct cost, divided by revenue.