Ideally, your gross profit margin should be stable or growing. It indicates that your revenue is higher than your expenses. If your gross profit margin is negative or decreasing, it’s a sign that you should cut costs, try a new marketing strategy, or fix something in your operations.
It’s best to analyze the gross profit margin yearly. Tracking it from week to week or even month to month can be misleading, especially if you’ve made a big investment in new equipment or are trying a new sales strategy.
“If your gross profit margin continues to climb over time, it’s a good indication that your business’s financial health is in good shape,” wrote HubSpot.
