Several factors can influence gross margin, including:
- Cost of Goods Sold (COGS): Higher costs reduce gross margin, so managing supplier relationships and production efficiency is critical. - Pricing Strategy: Setting prices too low can squeeze margins, while overly high prices might reduce sales volume. - Sales Volume: Higher sales can lead to economies of scale, reducing the per-unit cost and improving the margin. - Product Mix: Offering a mix of high-margin and low-margin products can balance overall profitability.