E-commerce Glossary

Gross Margin

Percentage of revenue remaining after COGS.

Gross margin measures profitability after deducting direct production costs. Formula: Gross Margin = (Revenue - COGS) / Revenue x 100. With $200,000 in revenue and $80,000 in COGS, gross margin is 60%. In e-commerce, a gross margin of 50-70% is common. It's the foundation for funding marketing, salaries, and R&D. A gross margin that's too low limits your capacity to invest.

Related terms

AOV (Average Order Value)Average amount spent per order in your store.See definition ARPU (Average Revenue Per User)Average revenue generated per user over a given period.See definition Blended CACAverage acquisition cost including all marketing channels.See definition Blended ROASOverall return on all advertising spend combined.See definition CAC (Customer Acquisition Cost)Total cost to acquire a new customer.See definition Churn RatePercentage of customers lost over a given period.See definition

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