Costs · Margins · The business of ecommerce
The usual Black Friday advice treats discount percentage as a marketing choice, but industry margin data shows the real ceiling on a markdown is set by gross margin, and most retailers are closer to that ceiling than they think.
Most merchants pick a Black Friday discount by looking at what everyone else is advertising, 30% off here, 50% off there, and then hope the number does not bleed them out. That approach gets the question backwards. The number that actually limits how deep a sale can go is gross margin, the gap between what something costs to make or buy and what it sells for before any other expense is counted, and that figure varies enormously by industry. A retailer in a high gross margin category can survive a discount depth that would sink a retailer in a low margin one, and the data on where industries actually sit makes that gap plain.
Apparel sits at a gross margin of 56.88%, according to the NYU Stern industry margin dataset. That means for every dollar of sales, 56.88 cents remains after the cost of the goods themselves, before rent, marketing, staff, or anything else is paid. A discount that eats into that gap but stays above the cost line still lets the business break even on the product, even if it does nothing for overhead. Compare that to Truck, where gross margin is just 10.41%. A sale that cuts price by even a modest percentage can push a truck-related business below the cost of the product itself, turning every discounted unit into a loss before a single other expense is even considered.
Auto Parts sits in between at a 15.84% gross margin, and Air Transport at 24.79%. The spread across these five sampled industries, from 10.41% up to 56.88%, shows that there is no single safe discount percentage that applies everywhere, and any advice that gives one flat number for every retailer is ignoring how differently these businesses are built.
Gross margin tells you what room exists before overhead, but pre-tax operating margin tells you what is left after it, and the two numbers do not move together. Apparel’s pre-tax operating margin is 10.18%, far below its 56.88% gross margin, which means most of that gross margin room gets absorbed by running the business before profit shows up. Advertising shows a pre-tax operating margin of 13.30%, the highest of the five sampled industries, even though its gross margin of 36.24% is below Apparel’s. Aerospace/Defense sits at 9.80% pre-tax operating margin against a 17.48% gross margin, a much narrower gap between the two figures than Apparel shows.
The broad industry benchmark from CSIMarket puts operating margin at 11.17%, against a gross margin of 30.15%. That pairing is a useful reference point for any retailer who does not fit neatly into one of the five sampled industries above, since it shows roughly how much of a typical gross margin gets consumed by operating costs before the business reaches its operating profit line.
| Industry | Gross Margin | Net Margin | Pre-tax Operating Margin | EBITDA Margin |
|---|---|---|---|---|
| Apparel | 56.88% | 3.85% | 10.18% | 9.11% |
| Advertising | 36.24% | -0.30% | 13.30% | 10.07% |
| Air Transport | 24.79% | 2.51% | 5.68% | 5.32% |
| Aerospace/Defense | 17.48% | 4.99% | 9.80% | 8.65% |
| Auto Parts | 15.84% | 0.72% | 6.37% | 5.67% |
| Truck | 10.41% | 1.29% | 3.16% | 2.32% |
The figures in this table come from the NYU Stern margin-by-industry dataset maintained by Aswath Damodaran, read on October 15, 2026, and the broad industry comparison figures of 30.15% gross margin and 11.17% operating margin come from CSIMarket’s industry profitability ratios page, read the same day.
Net margin strips out everything, including taxes and financing costs, and it is the figure least forgiving of a discount that goes too deep. Aerospace/Defense posts the highest net margin of the sampled industries at 4.99%, followed by Air Transport at 2.51% and Truck at 1.29%. Auto Parts sits at 0.72%, and Advertising actually shows a negative net margin of -0.30%, meaning the average company in that sample lost a fraction of a cent on every dollar of revenue even outside of any seasonal promotion.
A negative or near-zero net margin does not mean a business cannot run a Black Friday sale. It means the sale has to be evaluated against gross margin and cash flow rather than against the hope that discounted volume will somehow turn a thin or negative final margin positive on its own. Apparel’s net margin of 3.85%, despite its large 56.88% gross margin, is a reminder that a wide gap between cost and price at the top of the income statement does not guarantee a comfortable profit at the bottom.
Before fixing a Black Friday discount, a retailer should look up its own gross margin and compare it to the range shown here, from Truck’s 10.41% to Apparel’s 56.88%, rather than copying a competitor’s advertised percentage off. Then check that number against the broad benchmark of 30.15% gross margin and 11.17% operating margin from CSIMarket, since a business below both of those figures has less room than a typical retailer and should plan a shallower sale or find savings outside the shelf price.
It depends on your gross margin, not on what competitors are advertising. A business with a gross margin near 56.88%, the figure reported for Apparel, can run a deep percentage-off sale and still cover the cost of goods. A business closer to 10.41%, the figure reported for Truck, has almost nothing to give away on the product itself and would need the saving to come from somewhere other than the shelf price. Always check your own gross margin first and treat industry figures as a sanity check, not a target.
Gross margin tells you how much room exists before you hit the cost of the product itself, which is the number that matters for a storewide percentage-off sale. Operating margin, reported at 11.17% for the broad industry benchmark, already has overhead subtracted, so it tells you what is left after the discount and after running the business, which matters for deciding whether the sale period as a whole was worth running.
Advertising shows a net margin of -0.30% in the dataset, meaning that across the measured companies, net income was slightly negative on average even before any seasonal discounting. A negative net margin does not stop a sale because the discount decision is usually made against gross margin and cash flow, not final net profit, and a single quarter's promotional push does not have to carry the whole year's profitability on its own.
Not necessarily. Apparel's 56.88% gross margin gives room for a deep sale, but its pre-tax operating margin is only 10.18% and its net margin is 3.85%, so overhead and other costs eat most of that room before profit is counted. A high gross margin creates the possibility of a deep discount, but the operating and net margin figures show whether the business can afford to actually use that room this season or needs to hold some of it back.
Start with the broad benchmark from CSIMarket, which puts gross margin at 30.15% and operating margin at 11.17% across the industry overall. If your margins sit above those two figures you likely have more discount room than a typical retailer, and if they sit below, a Black Friday discount needs to be shallower or offset by volume rather than copied from a bigger competitor's sale depth.