Margin/Average Margin/Gross Margin
Margin is the percentage (gross) profit that is from the sale of products or services. Margin means how much the price of a product or service is increased.
Margin calculation = (net sales – COGS*) / net sales
*cost of goods sold
The average margin expressed as a percentage is the profit margin of your company in the long run (on average several years of your business). It is calculated by summing all costs and all profits and determining the total profit margin.
You can set the margin of individual products when creating a bidding strategy.
When determining the margin, it is good to know what ROAS we want to work with.
Gross margin is a financial indicator of profitability that compares the added value and total sales of the company. It is expressed as a percentage. A higher value is better for this indicator. This financial indicator is not suitable for creating a pricing strategy, but it is a good indicator of the company’s financial health. Without adequate gross profit, the company would not be able to pay its operating and other costs. The average gross margin in the EU is 20-30%.