Gross margin has been 38% for three years. Nothing underneath it is the same.

A stable blended margin is one of the most reassuring numbers a business produces, and one of the easiest for two opposite problems to hide inside.

By Steve 5 min read
Abstract bridge artwork for Gross margin has been 38% for three years. Nothing underneath it is the same.

A margin that holds steady for three years reads as evidence of control. Costs are being managed, pricing is holding, discipline is working. It is also the single number most capable of being stable for reasons that have nothing to do with discipline, because a blended gross margin is a weighted average, and weighted averages are built to cancel movements out. The question worth asking of any stable margin is not whether it held, but what it is the average of, and whether the things being averaged are moving in…

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