Gross profit margin is the percentage of gross profit to sales revenue (or operating income), where gross profit is the difference between revenue and operating costs corresponding to revenue.
Use the formula to express: gross profit margin = gross profit/operating income × 100 = (operating income - operating cost)/operating income × 100.
Extended information:
The gross profit margin usually depends on the following factors:
1. Market competition
The so-called rare thing is the most valuable thing , if there are no such products on the market, or there are very few such products, or the quality and functional value of such products are superior to similar products on the market, then the price of the product will naturally adopt a high-price strategy. On the contrary, if If you are operating a large-scale product or a sunset industry, the market is relatively saturated, so you can only obtain a sales price that follows the trend and obtain an average sales profit.
2. Corporate marketing
Is it to expand market share or for other reasons? If it is to expand market share, you may first open the market at a lower price. After the market has stabilized, the pricing strategy will be readjusted based on market recognition. If the purpose is to recover investment as quickly as possible, the company may enter the market at a higher price and then gradually penetrate the market.
For mature products, the market usually implements a return method of high price and small quantity, small price and large quantity. How to balance between price and sales volume in order to maximize profits is an important issue for enterprises in marketing planning. An important issue that must be faced and cannot be avoided.
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