Revenue minus the direct cost of goods sold, as a percentage of revenue. Gross margin sets the ceiling on everything you can afford to do, the more of each sale you keep before shipping and marketing, the more room you have to acquire customers profitably. It is necessary but not sufficient: a great gross margin can still produce a negative contribution margin once shipping and CAC are in.
Benchmark. Many DTC brands target around 65%+ gross margin to leave enough room for shipping, fulfilment, and acquisition. Apparel and electronics can run 45-65% structurally, but below ~50% the model only works with very low CAC or very high repeat.