Margin bridge

Revenue can grow while profit shrinks. A margin bridge tells that story: it walks from the gross margin of a baseline period to the gross margin of the current period, and splits the change into six effects — the five revenue effects plus a Cost effect.

The six effects

Price effect — selling the same products at different prices, valued at current volumes.
Cost effect — unit costs moving up or down, also valued at current volumes. A price increase that merely passes a cost increase through nets out against the price effect, visibly.
Volume effect — more or fewer units, valued at the baseline average unit margin.
Mix effect — the sales composition shifting toward higher- or lower-margin products. This is where margin stories usually hide: revenue mix and margin mix often disagree.
New products and Discontinued — the margin brought by launches and lost with delistings.

As on the revenue bridge, some of these effects split further when your data allows it: the mix effect into a category mix and a within-category mix (once you map product categories), and the price effect into a gross price effect and a discount effect (once you provide gross revenue). Each split sums exactly to the effect it refines, so the margin bridge still reconciles to the cent.

Why margin tells a different story than revenue

A product can be a top seller and a margin drag at the same time. Raising prices 3% while costs rise 5% looks fine on a revenue bridge and bad on a margin bridge. On a product selling 1,000 units at 10.00 with an 8.00 unit cost, that is +300 of price effect against −400 of cost effect: revenue grows by 300 while margin drops by 100. Shifting volume toward a cheap, high-margin product can lower revenue and raise profit. Reading both bridges side by side is what turns a variance report into a decision.

What it takes to build one

One extra column: a unit cost or COGS per product and period. The rule here is strict — if any retained row lacks a readable cost, the margin view is disabled and the app tells you how many rows need fixing, rather than quietly computing a wrong bridge. The revenue bridge is never affected.

Map the cost column in your export and you get both bridges: reconciled waterfalls, drill-down to SKU, top movers, Excel and PNG exports — without your data leaving the browser.

Build your bridge — free, runs in your browser