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Gross Margin is Everything!

boutique business boutique business tools boutique ownership education coaching cost of goods sold growth inventory profit first retail Oct 24, 2022

I'm going to show you how important your gross margin is in an inventory-based business.

If we have $10,000 in sales and the cost of goods sold on those sales is $5,000, this leaves us with a gross margin of $5,000.

Now, let's now say it costs us $5,000 to run our business. This leaves us with a net profit of $0.

Here's how we can shift that:

If we make those same $10,000 in sales but we lower our cost of goods to $4,000, our gross margin is $6,000.

It still costs us $5,000 to run our business, but at the end of the day, we have $1,000 in our pocket.

The lower cost of goods sold directly corresponds to the higher margin.


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Weekly bite-sized advice from Ciara Stockeland.