Margins Glossary

Browse 9 margins terms defined in plain English, from the cultural dictionary of computing.

9 Margins Terms

Contribution Margin
Revenue minus variable costs directly associated with delivering that revenue, showing how much is left to cover fixed costs and profit. It is a key lens for...
Cost of Goods Sold
The direct costs tied to producing or delivering what the company sells, such as hosting, manufacturing, support delivery, or payment processing depending on...
Cost of Revenue
The costs directly associated with generating recognized revenue, often including support, hosting, services delivery, and infrastructure. It is closely...
Economics of Scale
The cost advantages that emerge as a business grows, spreading fixed costs or improving purchasing, infrastructure, and process efficiency at higher volume....
Gross Margin
Revenue minus direct costs, expressed as a percentage of revenue, showing how much remains before overhead and operating expenses. Gross margin is a key signal...
Operating Leverage
The ability of a business to grow revenue faster than operating costs, improving margins as scale increases. Software investors care deeply about operating...
Operating Margin
Operating income expressed as a percentage of revenue, showing how much profit remains after normal operating costs but before interest and taxes. It is a core...
Profit Margin
Profit expressed as a percentage of revenue, showing how much of each dollar remains after costs at the relevant level are removed. The exact meaning depends...
Variable Cost
A cost that changes with output, usage, or sales volume, such as payment fees, shipping, usage-based infrastructure, or labor directly tied to delivery....

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