Margin is the percentage of revenue retained as profit after accounting for the cost of goods sold (COGS). It’s a foundational financial metric for evaluating profitability.
Why Margin Matters
- Shows how efficiently a business turns revenue into profit
- Helps evaluate pricing, discounting, and cost structure
- Critical for sustainable growth and cash flow
- Guides merchandising and assortment decisions
- Influences investment and resource allocation
How Margin Is Calculated
Common Use Cases
- Pricing strategy
- Discount evaluation
- Category profitability analysis
- Vendor negotiations
- Financial planning
Related Terms
- Markup
- Gross profit
- Net margin
- ASP
- AOV
What this metric really tells us
Margin is one of the clearest mirrors a business has. It reflects the quality of decisions across pricing, sourcing, operations, and customer experience. But margin isn’t just a financial measure, it’s a story about value exchange. When teams read margin with empathy, they see not just cost pressures or pricing levers, but the deeper question: are we creating value that customers recognise and are willing to pay for? Strong margin comes from alignment, clarity, and long‑term thinking. It’s where leadership intuition meets disciplined strategy, and where sustainable growth truly begins.
