Gross Profit Margin is the percentage of revenue that remains after subtracting the cost of goods sold from total revenue.
For example, if your company sells a product for $100 and the cost of goods sold is $50, your gross profit margin is 50%.
Gross profit margin is a very important metric to track because it tells you how much money your company is making off of each sale. It also helps you determine if you're charging too much for your product or service.
For example, if your gross profit margin is only 10%, you might be charging too much for your product. If you're selling a product for $100 and the cost of goods sold is $50, you're only making $50 per sale.
If you're making a lot of sales, but your gross profit margin is low, you might want to consider lowering the price of your product or service.
It can be difficult to calculate Gross Profit Margin directly inside of Xero; that's where Causal comes in.
Causal is a modelling tool which lets you build models on top of your Xero data. You simply connect Causal to your Xero account, and then you can build formulae in Causal to calculate your Gross Profit Margin.
Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.
In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Gross Profit Margin. This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.
When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.
Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Gross Profit Margin.