Margin

Gross margin is revenue minus the direct cost of what you sold. Net margin is what survives after every other expense. A $1m e-commerce business at 8% net margin takes home less than a $200k consultancy at 60%.

Margin is why the same revenue number means wildly different things across business models. Software has famously high gross margins; anything involving physical inventory rarely does. Compare businesses on margin, never on revenue.

Follow a single order down. A $35 product with $11 of cost, $6 of shipping and $4 of marketplace fees leaves $14 of gross margin, or 40%. Spend $10 acquiring the customer and $4 is left - 11% - before rent, software or your own time. This is why revenue announcements mean nothing on their own: two businesses can quote the same $1m and one of them is a job that loses money.

Margin decides which channels you are allowed to use. At 60% you can afford paid acquisition, agencies and mistakes. At 11% you need organic traffic, repeat purchases or a higher price, because there is nothing left to pay a platform with. Low margin is not fatal, but it closes doors quietly, and businesses usually discover which ones only after they have scaled into them.