Gross Margin

Gross Margin displays the percentage of revenue retained after covering the direct costs required to deliver your product or service.

In Rillet, Gross Margin is calculated using revenue and cost data from your Chart of Accounts.

What This Report Shows

The Gross Margin report displays values by reporting period.

The report includes the following elements:

• Revenue Total revenue recorded for the period.

• Gross Profit Revenue minus Cost of Goods Sold.

• Gross Margin Percentage Gross Profit divided by Revenue.

The period selector determines which reporting periods are included in the report.

How Gross Margin Is Calculated

Gross Margin is calculated using revenue and cost data from your general ledger.

The system applies the following formulas:

• Gross Profit

  $$\text{Gross Profit} = \text{Total Revenue} - \text{Total Cost of Goods Sold (COGS)}$$
• Gross Margin

  $$\text{Gross Margin} = \frac{\text{Gross Profit}}{\text{Total Revenue}} \times 100$$

The system defines each value as follows:

• Total Revenue Journal entries posted to GL accounts with the Revenue subtype.

• Total Cost of Goods Sold Journal entries posted to GL accounts with the Cost of Goods Sold subtype.

Operating expenses and non-operating income are excluded from the calculation.

Configuration and Data Sources

Gross Margin depends on account classification in your Chart of Accounts.

To ensure accurate calculation:

• Assign the Revenue subtype to income-related GL accounts.

• Assign the Cost of Goods Sold subtype to direct cost accounts.

Once accounts are correctly classified, the system automatically includes qualifying journal entries in the calculation.

See Also

Learn more about profitability and financial performance metrics in Rillet:

• Recurring Revenue (ARR/MRR)

• Net Burn

• Cash Revenues

• Burn Multiple

• Customer Acquisition Cost (CAC)

• LTV to CAC