#profit-margins
Calculate, benchmark, and improve profit margins across your business
Same-store sales strip new locations out of retail growth; sales per square foot tests whether each store earns its rent. Formulas and benchmarks.
Tesla's Q3 2026 gross margin rebounded to 19.6% on flat $28.05B revenue, but a 69% R&D jump cut operating income 56% and net income 43% to $787M.
A loss leader sells below cost to win the trip — the basket it pulls in must cover the subsidy, or the loss never comes back.
Your margin of safety is sales minus break-even sales — how far revenue can fall before losses start. Compute it in dollars, units, and percent.
Sales mix is your products' sales share — a tilt toward low-margin items cuts profit while revenue holds still. Track your weighted-average margin monthly.
Gross margin tests pricing, operating margin tests overhead, net margin tests financing and tax — read the three as a funnel to find where profit leaks.
COGS is the direct cost of what you sold — materials, labor, freight. Revenue minus COGS is gross profit, the verdict on whether your pricing works.
COGS is beginning inventory plus purchases and direct labor minus ending inventory — under IRS rules a $5,000 miscount moves gross profit $5,000.
LIFO matches newest costs against sales, cutting taxable income while prices rise — but the IRS locks in the election and taxes the reserve when you leave.
Gross margin tests your pricing, operating margin tests your overhead, net margin tests the bottom line — track all three monthly to find the leak.
Freight-in is part of inventory cost and becomes COGS when goods sell; freight-out is a selling expense. Mixing them distorts gross margin and tax.
Gross margin tests your pricing; net margin tests the whole business — the gap between them shows whether pricing or overhead eats your profit.
