Talk:Gross margin

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Whats a good profit margin?

Hello all,

What is the difference between this margin calculation and the cost-plus cal ?

Best regards,

JJD

This page is ugly. Why can't it just use plain text calculations or tables instead of those gaudy big letters?--Jd147703 17:50, 21 July 2006 (UTC)

Why are margins generally so high in the UK?

[edit] what is gross margin?

There are fundamentally two schools of thought. One classifies gross margin as sales - cost of sales, but includes in the cost of sales ONLY direct consumables, i.e. raw material, packaging, possibly uitilities if these can be directly attributed. The second includes all the above plus direct labour. The second approach is obviously more accurate, the problem with it is however that it is debatable to what extent labour is in fact a variable cost, i.e. in practice companies do not have the flexibility to increase and decrease labour costs according to the needs of the order book. With raw material etc. this is adaptable. Conclusion: it would be handy to have a standard, so that when someone refers to gross margin (or gross profit or direct costs of sales) we all assume it to be the same. An interesting solution may be an intermeduiate step, used by some companies, which starts with sales, then goes to variable margin (-direct consumables) and in a second phase to gross margin (-direct labour and possibly some others).

Werner

[edit] Categorising

I think the page should be categorized under Finance Ratios. Seeing as no-one else has categorized it, I will put it in that category- if you feel it unsuitable, change it and discuss here. —The preceding unsigned comment was added by 82.37.136.179 (talk) 23:40, 2 February 2007 (UTC).