FAQ & key takeaways
How to read this metric
What it measures
Product Margin is the percentage of the selling price that is profit. It tells you how much of every dollar in sales you keep after paying for the cost of the goods sold (COGS).
Why it matters
Understanding individual product margins is essential for building a profitable ecommerce catalog. It helps you identify your “winners” and “losers,” inform discount strategies, and ensure your overall business can cover its operating expenses.
How to improve product margins
- Lower COGS: Negotiate better rates with suppliers or find more cost-effective manufacturing methods.
- Increase Selling Price: Test higher price points, especially if your product offers unique value or has high brand loyalty.
- Reduce Shipping Costs: Optimize packaging and negotiate better rates with carriers.
- Bundle Products: Increase the overall order value and reduce per-unit fulfillment costs.