What is the difference between Gross Profit and Gross Margin?

Gross profit margin only includes the direct costs involved in the production, while gross margin includes operating expenses, such as salaries, supplies, and what is needed to keep the building running. Both metrics are vital in assessing the financial health of a company. One of the main differences between gross profit and gross profit margin arises in the meaning of the two terms. Gross profit and gross profit margin are highly regarded as terms that define the success of a company.

The higher the margin, the more adequate the company's administration is in generating revenue for each dollar of cost. The expression for gross profit is the whole number, and the total for gross profit margin is the percentage of ratio.