Gross Margin

Gross Margin is a key indicator for measuring profitability in foreign trade. It refers to the percentage of profit in sales revenue after deducting direct costs (such as procurement costs, production expenses, freight, tariffs, etc.). Its calculation formula is: (Sales Revenue - Direct Costs) / Sales Revenue × 100%. In foreign trade scenarios, gross margin is often used for quotation decisions, profit analysis, and customer negotiations. For example, exporters need to consider the cost composition under different trade terms such as FOB and CIF, as well as the impact of exchange rate fluctuations, tax rebates, and other factors on gross margin. Note: Gross margin only reflects direct costs and does not include indirect expenses such as administrative expenses and selling expenses, so it is different from net margin; at the same time, gross margins vary greatly across industries and products, and need to be evaluated in the context of specific business. In addition, in foreign trade, it is also necessary to distinguish between 'product gross margin' and 'order gross margin,' the latter may include additional costs such as commissions and letter of credit fees. Proper use of gross margin helps companies optimize pricing strategies and cost control.