Gross margin
Also written: gross profit margin
What a company keeps out of every 100 dollars of sales once it has paid what the product costs to make.
Take the money a company receives from customers, subtract what it paid for the raw materials, the components and the factory work that produced the goods, and what remains is the gross margin. It is usually written as a percentage of sales.
It is the first line of defence in a set of accounts. Everything else, research, salaries, marketing, tax, is paid out of it. A company whose gross margin falls is a company with less room for all the rest, even if its sales are rising.
It says nothing about how well the company is run overall, because it stops before those other costs. For that you need the operating margin, which subtracts them.
Apple sold 109,417 million dollars of products and services, and the cost of making them was 54,647 million. The difference, 54,770 million, is the gross margin: 50.1 dollars kept out of every 100 sold. Three months earlier the figure was 49.3.
The usual mistake. A gross margin containing a one-off item is not comparable with the quarter before. Apple’s reported 50.1 percent for June 2026 included about 2 points of tariff refunds that will not recur; the comparable figure was 48.1.
See also
This definition is part of the EPTA5 lexicon, written so that a reader who does not work in finance can follow our market notes without stopping. It is general information and not investment advice. Read the notes.