2025 Gross Margin Benchmarks by Industry: Where Does Your Business Stand?

Understanding industry gross margin benchmarks is crucial for business planning. This data-driven guide provides the latest 2025 averages across sectors — plus advice on improving your margins and a free strategy session offer.
May 16, 2025
Gross Margin
2025 gross margin benchmarks

Gross margin is a critical measure of business health — and understanding where you stand relative to your industry peers is essential for setting realistic growth, pricing, and profitability targets.

In this guide, we’ll cover:

  • What gross margin measures
  • 2025 gross margin benchmarks by major industries
  • Why margins vary by sector
  • How to improve your own gross margins
  • How to book a free strategy session to optimise your performance

What is Gross Margin?

Gross margin represents the percentage of revenue that exceeds the cost of goods sold (COGS).
It measures how efficiently you produce or deliver your offering.

Gross Margin Formula:

Gross Margin (%) = ((Revenue - Cost of Goods Sold) ÷ Revenue) × 100

✅ A higher gross margin means more money available for overhead, salaries, reinvestment, and profit.

2025 Average Gross Margin Benchmarks by Industry

Here are the updated 2025 benchmark estimates across key sectors:

Industry Average Gross Margin (%)
Software (SaaS) 75% – 85%
Professional Services (Consulting, Marketing) 55% – 65%
Healthcare Providers 45% – 55%
Manufacturing 25% – 35%
Retail (E-commerce) 30% – 45%
Hospitality (Hotels, Restaurants) 20% – 30%
Logistics & Transportation 15% – 25%
Construction 15% – 20%

Why Gross Margins Vary by Industry

Margins are influenced by:

  • Cost structure: Labour vs materials vs technology costs.
  • Pricing power: Ability to charge premium prices.
  • Market competition: High competition often compresses margins.
  • Business model: Asset-light models (e.g., SaaS) often enjoy higher margins than asset-heavy models (e.g., construction).

✅ Comparing gross margins only makes sense within similar industries.

How to Improve Your Gross Margin

1. Raise Prices Strategically

Introduce small, incremental price increases based on value delivered, not just costs incurred.

2. Reduce Direct Costs

  • Negotiate better supplier terms
  • Improve production or service delivery efficiency
  • Reduce wastage and returns

3. Optimise Product Mix

Focus on promoting high-margin products or services, and consider retiring low-margin offerings.

4. Improve Operational Efficiency

Streamline processes to lower direct labour or manufacturing costs.

5. Leverage Technology

Automation tools, digital platforms, and cloud-based systems can significantly lower direct service delivery costs.

Quick Self-Check: How Does Your Business Compare?

  • Is your gross margin above or below the 2025 industry average?
  • If below, do you know where margin is leaking?
  • Have you reviewed pricing, supplier contracts, and operations in the last 12 months?

✅ Regular margin analysis = stronger financial resilience.

Final Thoughts

Gross margin isn’t just an accounting metric.
It’s a leading indicator of pricing power, operational strength, and business resilience.

Know your number. Improve your number. Secure your future.

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Improve your margin strategy with these additional expert resources:

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Improving profit margins is one of the most effective ways to increase business profitability and ensure long-term success. Profit margins measure how much of each dollar of revenue your business keeps as profit, so even small improvements can significantly boost your bottom line. In this guide, we’ll explore how to improve profit margins through a mix of revenue enhancement and cost reduction strategies. These profit margin strategies are drawn from real-world business experience and will help you optimize both your gross and net margins.

Understanding Gross Margin

Gross margin is one of the most fundamental indicators of a company’s financial health. Understanding gross margin can help you price products correctly, manage costs, and gauge your business’s efficiency in delivering goods or services. In simple terms, gross margin tells you how much of your revenue remains after covering the cost of goods sold – it measures the core profitability of your product or service before other expenses. In this article, we’ll break down what gross margin is, how to calculate it, why it’s important, and how it differs from net margin. We’ll also look at gross margin in financial statements, discuss typical gross margin benchmarks across industries, and examine how gross margin contributes to competitive advantage. By the end, you’ll have a solid grasp of gross margin and how to use it to make better business decisions.

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