How to Calculate and Improve Your Retail Gross Margin

What Gross Margin Actually Tells You

Gross margin is the percentage of revenue left after subtracting the cost of goods sold (COGS). It's the clearest single number for understanding whether your pricing and purchasing are working together, before overhead even enters the picture.

The Formula

Gross Margin % = (Revenue − COGS) ÷ Revenue × 100

If you sell a product for ₦1,000 and it cost you ₦650 to acquire, your gross margin is 35%.

What Affects It

• Supplier pricing and how often you renegotiate it
• Shrinkage, which quietly erodes margin without showing up in your price list
• Discounting and promotional pricing habits
• Product mix, since not every line carries the same margin

How to Improve It

Start by tracking margin at the product or category level, not just as one company-wide number. That's usually where the real opportunities and problems are hiding. A system like Bizman that ties sales, inventory, and cost data together makes this visible without manual spreadsheet work.