Some margins really are better than others.
Revenue is vanity, profit is sanity — and margin is the story in between. Learn which shade of profitability your business is actually running on.
Two businesses can both turn over a million dollars. One takes home $250,000; the other takes home $20,000 and a migraine. The difference is margin — and margin is where bookkeeping quietly becomes strategy.
Gross vs net margin
- Gross margin: revenue minus the direct cost of what you sell, as a percentage
- Net margin: what's left after all expenses, tax and overheads — your real take-home
- Contribution margin: what each sale contributes after variable costs
Clean books make margin visible
You can't improve a margin you can't see. Correctly coded costs are what separate a real gross margin from a comforting guess.
Why margin beats revenue
Chasing revenue without watching margin is how businesses grow themselves broke. Every extra sale at a thin margin adds work, risk and cash strain for very little reward. Margin tells you which sales are worth having.
Improving your margin
- 1Know your true cost of delivery before you price anything
- 2Review pricing regularly — costs creep, prices often don't
- 3Cut or renegotiate the costs that don't touch the customer experience
- 4Focus effort on your highest-margin products and clients
Sources & further reading
This guide is general information for Australian businesses and is not personal tax, legal or financial advice. For advice specific to your circumstances, speak to a registered tax agent, accountant or the relevant authority.
Frequently asked
Quick answers.
- What's a good profit margin?
- It varies wildly by industry, so compare against your own trend and sector benchmarks rather than a single magic number. The direction of travel matters more than any one figure.
- How does bookkeeping help with margins?
- Accurate, timely books show your real costs and margins by product, service or client — turning pricing from guesswork into a decision.
Ready when you are
See what SQEZE can do for your business.
Weekly bookkeeping, real humans and total transparency. Explore how we work, or book a friendly catch-up call and we'll take the squeeze off your numbers.
