Definition
Gross margin is the share of revenue left after subtracting only the direct costs of producing the work — material, direct labour, finishing, install. Overhead, sales costs and admin are not included. It is the most commonly used profitability metric on a per-job basis in custom manufacturing.
Example
Worked exampleA R 100,000 kitchen with R 40,000 material, R 18,000 direct labour and R 6,000 finish/install has direct cost of R 64,000 and gross margin of R 36,000 — 36%. Whether that 36% is "good" depends on the shop's overhead load.
Why it matters
Gross margin is the cleanest signal of pricing health. A consistent gross margin across closed jobs means your quoting logic is sound. Variance suggests either pricing drift, wastage drift, or scope creep — each of which has a different fix.