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Business Glossary
How to Benchmark Gross Margin by Sector UK
Gross margin benchmarking compares your gross margin percentage against the typical range for businesses in your sector. Without sector context, a 30% margin tells you nothing. With it, you know exactly where you stand.
The Formula
Gross Margin Position = Your GM% vs Sector Minimum, Midpoint, and Target
Worked Example — UK SME
A UK hospitality business: 58% gross margin. Distribution benchmark 12–28% — would be exceptional. Hospitality benchmark 55–70% — within range but below midpoint. Without sector context, 58% looks impressive. With it, there is clear room for improvement.
UK Benchmark
📊 UK sector gross margin benchmarks: Distribution 12–28%, Construction 15–30%, Manufacturing 25–44%, Retail 30–48%, E-commerce 28–45%, Hospitality 55–70%, Service 45–62%, Professional services 55–75%.
Common Questions
Where do UK benchmarks come from?
Derived from Companies House filings, ONS sector data, and commercial experience across UK SMEs. They represent typical ranges for businesses of £200k–£5m revenue.
What if my gross margin is below the sector minimum?
Below minimum is a critical signal. Either pricing is too low, COGS is missing some costs (especially for importers), or product mix has too many low-margin lines. A pricing review and landed cost audit are immediate priorities.
Does gross margin vary within a sector?
Yes, significantly. A fashion retailer might achieve 55% while a food retailer achieves 28%. Sub-sector benchmarks are more useful than broad sector averages where available.
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