Gross Margin: Category A 50% (healthy), Category B 15% (dying slowly)

What Is Gross Margin?#

Gross Margin % = (Price - COGS) ÷ Price × 100%. Example: electronics avg price SGD 500, COGS SGD 425, margin = (SGD 75) ÷ SGD 500 = 15%. Apparel avg price SGD 100, COGS SGD 50, margin = SGD 50 ÷ SGD 100 = 50%. Higher margin = more room for operating costs + profit.

Why Gross Margin Matters#

Must cover: operating costs (rent, labor, utilities), marketing, support, taxes. If gross margin 15%, after 10% operating costs, only 5% left for profit/tax. If gross margin 50%, 40% left for operating + profit. Margin = your cushion.

Identifying Low-Margin Products#

List all products/categories, calculate gross margin %. Rank by margin. Bottom 20% by margin are dragging profit. Action: (1) discontinue if no strategic value, (2) raise price if market allows (elastic test first), (3) reduce COGS (cheaper supplier, less waste).

AskBiz Margin Analysis#

Ranks products by gross margin %. "Electronics 15% margin (SGD 1M revenue = SGD 150K gross). Apparel 50% (SGD 800K = SGD 400K). Home goods 30% (SGD 500K = SGD 150K). Blended: 31% margin. Opportunity: increase apparel (high-margin), decrease electronics (low-margin). Shift 10% volume: lose 10% × SGD 1M × 15% = SGD 15K margin from electronics, gain 10% × SGD 800K × 50% = SGD 40K from apparel. Net: +SGD 25K gross profit (3.6% improvement)."

• Retail store: electronics category SGD 1M revenue, 15% margin = SGD 150K gross.
• Apparel SGD 800K revenue, 50% margin = SGD 400K gross.
• Home goods SGD 500K revenue, 30% margin = SGD 150K gross.