# What is GMV – Gross Merchandise Value?

What is GMV – Gross Merchandise Value? Total sales before returns, discounts, and fees. GMV = price × quantity for each transaction.

## How it works in practice

GMV measures 'market size' — how much money flowed through a platform. For a marketplace: revenue = GMV × commission rate. For a marketplace seller: GMV is what you report to the marketplace. For an independent store: GMV is roughly equal to gross revenue.

## Related metrics

- Net Revenue — GMV is always greater than net revenue
- Take Rate — a marketplace's revenue equals GMV × take rate
- Gross Revenue — the equivalent metric for an independent store
- Marketplace — GMV is a core marketplace metric

## Common misconception

'High GMV means a great business.' Uber and Airbnb report GMV, but their revenue is only 20-30% of it. A store reporting $1.4M GMV on Etsy with an 18% take rate has $250K in revenue. GMV tells you how much passed through, not how much remains.

## How to fix it

Confusing GMV with revenue? (1) For an independent store, gross revenue is the right metric, (2) for a marketplace seller, your profit is GMV minus fees and costs, (3) for every financial report, clearly define the metric — gross/net/contribution.

## Real-world example

An Etsy seller said, '$50,000 GMV this year — a great business.' Real calculation: Etsy fees 6.5% + processing 3% + ads 8% = 17.5%. Net GMV: $41,250. COGS $18,000. Contribution: $23,250. After fixed costs: $10,500 in annual profit. 'Great' became 'decent.'

## Where to start

GMV is a vanity metric for an independent store — impressive but not the full story. For reporting to partners and investors, GMV is useful. For daily management, rely only on net revenue plus contribution margin.

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Category: Finance · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/gmv-gross-merchandise-value