Product Gross Margin
How much of sales revenue is left after costs?
This metric shows for a given product how a large share of the revenues after deducting the Cost Of Goods Sold (COGS) is left for profit. Products with higher margins have a higher remaining percentage of sales for generating profits or covering other operating costs, such as overhead. Since the gross margin is the most critical driver of value created from scaling, this metric is beneficial for companies that are making a scalable product.
Increased sales will impact profitability to a larger extent if your products have a high gross margin. If you want to maximize the value created from scaling, you should focus on keeping your gross margin high.