Margenkompression

Margenkompression, in business and finance often called margin compression in English, describes a trend in which profit margins decline over time even as sales may grow or remain flat. It occurs when average selling prices fail to keep pace with rising costs, or when a company’s product mix and pricing practices erode profitability.

Causes of Margenkompression include input price inflation for raw materials and energy, higher logistics and distribution costs, and currency fluctuations. Competitive pressure and promotional discounting can drive prices lower, while shifts toward lower-margin products or channels further compress margins. Regulatory changes, tariffs, and changes in reimbursement or contract terms can also contribute.

Margins are commonly tracked using gross margin and operating margin. Gross margin reflects the relationship between revenue and cost of goods sold, while operating margin accounts for additional operating expenses. A downward trend in these metrics over successive periods signals compression, sometimes despite rising revenue.

The consequences of Margenkompression can be significant, reducing earnings, limiting investment capacity, and affecting shareholder value. Firms may respond with pricing optimization, renegotiation of supplier contracts, and cost containment across procurement, production, and overhead. Strategies often include improving product mix, focusing on higher-margin offerings, efficiency improvements, and better management of promotions and discounts.

Margenkompression is a cross-industry concern, especially in retail, manufacturing, and sectors facing volatile input costs. Understanding its drivers and monitoring margin indicators helps managers implement timely pricing, costing, and operational adjustments.