What is a difference between the profit margin and the gross profit rate? The gross profit rate will normally be higher than the profit margin ratio. The gross proftrate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income. None, these are interchangeable terms. Aprofit margin of 7% means that 7 cents of each net sales dollar ends up in net income and a gross profit rate of 7% means that the cost of the goods were 7% of the selling price