Gross Margin Method is a term used in business to define the ratio of a company’s revenue that is not directly attributed to the cost of producing or selling their products or services. This method looks at the total revenue made from a given period, subtracts the cost associated with manufacturing, distribution, and other costs related to sales and production, and then divides that number by the total revenue for that same period. The resulting figure provides an analytical representation of the profitability and success of a given product or service. With this method, businesses can maximize profits by setting prices in order to optimize gross margins over time.