When it comes to what affects gross margin in business, most people initially think about reducing expenses to improve profitability. Reducing unnecessary costs can undoubtedly help, but other options remain. Therefore, it’s essential to fully understand your gross margin’s components before you plan to increase your profits.
Three main factors play into a business’s gross margin calculation: the cost of creating a product or service, the price you’re selling it for, and the number of sales you make.
Changes can occur in any one of those categories, ultimately impacting your bottom line. But, no matter what you decide to tweak, variations on those three factors affect gross margin the most.
It would be best if you considered more than what you’re currently charging to see your gross profit margin increase. So, considering what affects gross margin, here are a few changes to implement.
Are you still wondering what affects gross margin in your business? A chat with a retail business coach can help. Click here for a complimentary video coaching call, and let’s discuss what factors affect a company’s gross profit rate.
Coach Dave
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