Gross Margin Analysis

Definition of Cost of Goods Sold (COGS):

COGS represents the direct costs associated with the production of goods or services sold by a business. This includes: 

• Materials: The raw materials used in the production of goods.
• Labor: The wages paid to workers directly involved in the production process.
• Overhead: Indirect costs associated with production, such as utilities, depreciation, and equipment.

What is a Good Gross Profit Margin?

For Service-Based Businesses

A good gross profit margin is usually higher, often between 50% to 60%, due to lower direct costs.