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  In this article, you'll learn:

  • How to calculate your gross profit margin.
  • Ideal gross profit margins for retailers.
  • How to view your gross profit margins in CommentSold.

About Gross Profit Margins

Margins help retailers analyze the health of their business by comparing the amount of revenue they generate to the various costs of their business (e.g., inventory, labor, utilities, etc.). 

A retailer’s gross profit margin is the difference between their total product sales and their total product costs. Gross profit margin is calculated as {( total revenue - total costs ) / total revenue } * 100.

Margins are expressed as a percentage, which makes it easier for retailers to aim for a specific margin on the individual product level even when product costs differ.

For example, say a retailer pays $5 for a hat and sells it for $10. Their profit is $5 and the margin is 50%. The same retailer buys a pair of shoes for $25 and sells them for $50. Their profit is $25 and the margin is also 50%.

If retailers can aim for a similar profit margin with their individual products, then it increases their chances of hitting their ideal gross profit margin.

Why Gross Profit Margins Matter to Your Business

  • Managing and increasing your gross profit margins is key to your business’s success.
  • Knowing and understanding target profit margins helps you know if your business is doing well.
  • You can identify which products, brands, and/or collections you are able to sell at an ideal margin and use this information to inform future purchasing.

Gross Profit Margin Benchmarks

It’s important for retailers to familiarize themselves with margin benchmarks so they know where their own margins fall. This allows retailers to know if they’re on track, excelling, or if they need to improve.

Below are our recommended benchmarks for retailers’ gross profit margin.

Average Good Excellent
46-52% 53-59% 60%+

View Your Margins on Products

With CommentSold, retailers can view and adjust the margins for individual products. This gives retailers the flexibility to make pricing changes (e.g., offer products at a sale price to move inventory) while still being mindful of their margins.

Adjusting the price and margins on the individual products you sell is the most direct way to impact your gross profit margin as that gross profit margin figure will compare the total revenue generated from these products to the total cost of the products sold.

New Product Record Existing Products

When you add a new product in CommentSold, you enter the Cost and Retail Price. CommentSold automatically calculates the Margin and Profit based on the information you enter.

  1. Select Products in the side menu of your CommentSold dashboard.
  2. Select Add Product in the top-right corner of the page.
  3. Enter the price you paid the vendor for the product in the Cost field.
  4. Enter the price you will sell the product for in the Retail Price field.
  5. Review the Margin and Profit figures calculated by CommentSold.
  6. Adjust the Retail Price, if necessary.

View Your Gross Profit Margin via Reporting

Your Main Reporting Overview allows you to view your gross profit margin across a date range you define (e.g., a week, a month, quarter, year-to-date, etc.). You can even view a breakdown of your gross profit margin by collection.

  1. Select Reporting in the side menu of your CommentSold dashboard
  2. Select All from the report options listed at the top of the page.
  3. Define your Start Date and End Date in the fields provided, then select the Retrieve button.
  4. Scroll down to the Orders section.
  5. Locate and view your Gross Margin.
  6. Select View by Collection if you wish to see a breakdown of each collection’s margin.

Learn More

  • Reporting
  • Margins
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