The gross margin is what remains after you divide your gross profit by your net sales (your gross sales minus sold items later returned by customers). The gross margin is a measure of how the selling price of your product compares to its cost.

Gross margin = gross profit / net sales


Plant, Albert C. (2007). The retail game: playing to win: a guide to the profitable sale of goods and services. Vancouver: Douglas & McIntyre Ltd.
Pratt, Jamie. (2003). Financial Accounting in an Economic Context. New York: John Wiley& Sons; 2003.