What is Gross Profit Margin?
Gross profit margin is the percentage of revenue that remains after subtracting the direct cost of producing the goods or services sold. It is the first profitability number every business should know.
A real Kenyan example
A general shop in Nairobi sells biscuits for KES 100 that cost KES 70 to buy. Gross profit is KES 30, gross margin is 30%.
Formula
Gross margin % = (Revenue − COGS) ÷ Revenue × 100
Why it matters
Gross margin funds everything else: rent, salaries, marketing, tax and finally net profit. A retail shop with 8% gross margin will struggle to survive; one with 30% has options.
How Veira helps
Veira POS reports live gross margin per SKU, per branch and per shift. The moment a supplier raises prices, your gross margin alert fires.
FAQs
What is a healthy gross margin?
It varies too much by trade for a single figure to be useful, and published benchmarks rarely describe a Kenyan SME. Work out your own from actual cost and selling prices, then watch the direction it moves: a margin falling against its own six-month trend tells you more than any external number.
How is it different from markup?
Margin is profit ÷ price. Markup is profit ÷ cost. A 40% markup is a 28.6% margin.
Does VAT affect gross margin?
Compute gross margin on net (VAT-exclusive) prices to compare like-for-like.
What lowers it?
Supplier price rises, theft, wastage, over-discounting.
Where does Veira show it?
On the live POS dashboard and weekly automated reports.