Gross margin typically falls in which range?

• A. 10% to 15%
• B. 22% to 24%
• C. 28% to 32%
• D. 15% to 18%

Answer: (B)

Gross margin shows how much of each dollar of revenue is left after producing the goods sold. It’s calculated as (revenue − cost of goods sold) divided by revenue, and expressed as a percentage. For many product-based businesses, COGS takes a sizable share of revenue, but not all of it, so margins commonly sit in the low-to-mid twenties. About 22% to 24% is a typical, representative range, meaning roughly $22–$24 of gross profit per $100 of revenue after covering production costs. Margins in the 28–32% range occur in industries with very high pricing or unusually low production costs, but aren’t as common across a wide range of businesses. Margins around 15–18% or 10–15% suggest tighter efficiency or stronger pricing pressures and are less typical for standard goods. So the 22% to 24% range best matches what’s commonly observed.