What is the gross profit margin?

Gross profit margin is the percentage of gross profit and sales income (or operating income), where gross profit is the difference between income and operating cost corresponding to income.

Expressed by the formula: gross profit = gross profit/operating income × 100% = (operating income-operating cost)/operating income × 100%.

Extended data:

Gross profit margin usually depends on the following factors:

1, market competition

As the saying goes, if there is no such product on the market, or there are few such products, or this product has advantages in quality and functional value compared with similar products on the market, then the price of the product naturally adopts a high-priced strategy. On the contrary, if the market is saturated by operating road products or sunset industries, then it can only be achieved by following the sales price of the crowd and realizing the average sales gross profit.

2, enterprise marketing

Is it to expand market share or other reasons? If it is to expand the market share, it is possible to open the market at a lower price first, and then readjust the pricing strategy according to the market acceptance after the market is stable. If it is to recover the investment as soon as possible, the enterprise may enter the market at a higher price, and then gradually penetrate.

The market usually rewards mature products with high price but small quantity and high price. How to balance price and sales volume to maximize profits is an important issue that enterprises must face and cannot avoid in marketing planning.

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