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Gross margin

Gross margin measures pricing power and production efficiency before overhead, R&D, and other operating costs are subtracted. A software company with near-zero cost of goods sold typically runs a far higher gross margin than a retailer or manufacturer, so this is more useful compared within an industry than across one.

Gross margin = (Revenue − Cost of revenue) / Revenue

This explains what gross margin measures. It isn't investment advice — see the disclaimer.