"Healthy margin" is industry-specific. Software can target 70%+. Grocery lives at 2%. Knowing your peer benchmark is the difference between pricing with confidence and copying numbers from unrelated industries.
Gross margin benchmarks (typical)
- SaaS / software — 70–85%. Code scales; COGS is mostly hosting.
- Consulting / professional services — 40–60%. Labor-heavy.
- Apparel retail — 45–55%. Keystone markup industry.
- Consumer packaged goods (CPG) — 30–50%.
- Restaurants (food margin) — 60–70% on food before labor/rent, 5–15% net.
- Construction — 15–25% gross, 5–10% net.
- Grocery / supermarket — 20–30% gross, 1–3% net. Volume game.
- Auto dealers — 5–10% on new cars, 15–20% on used.
- Hardware retail — 30–40% gross.
- Jewelry — 50–100% gross (keystone or higher).
- Luxury goods — 60–80% gross. Brand premium.
Why margins differ
Three factors dominate:
- Cost structure — software has near-zero marginal cost. Physical goods have supply chains.
- Competitive intensity — commodity markets compete margins away. Differentiated products hold margin.
- Scale vs price — high-volume categories can run thin. Low-volume categories need thick margins to stay in business.
Benchmark to peers, not across industries
A 15% gross margin would be a disaster for a SaaS company and a triumph for a grocery chain. The question isn't "is my margin high enough" in isolation — it's "is my margin high enough vs my direct competitors".
// TRY THE TOOL
CHECK YOUR MARGIN.
Enter cost + price. Get gross margin %, profit, and markup equivalent.
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