# Gross Margin

Gross profit as a percentage of revenue.

## Definition

Gross margin shows what fraction of every dollar of revenue is left after paying the direct costs of production. A 70% gross margin means $0.70 of every revenue dollar funds R&D, sales, overhead, and profit.

## Formula

(Gross Profit ÷ Revenue) × 100

## Why it matters

Gross margin is the single best indicator of pricing power and competitive moat. Software companies typically run 70–85%; commodity businesses often run 10–25%. Persistent gross-margin compression is a serious warning sign.

## How Standard Equity uses it

Shown in the main table, and the SE Grade's moat pillar checks how stable it has been. Banks and broker-dealers show Net Interest Margin (NIM) in its place; insurers have no cost of revenue and show the combined ratio (or benefit ratio) instead.

## The metric

| Category | Margins |
| -------- | ------- |
| Unit     | %       |

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