twelfth · Glossary · Pricing
Gross-profit floor
Also called GP floor
A gross-profit floor is the lowest margin percentage a category accepts on a line before a more senior person has to agree to the decision.
What it means for retail and category teams
It is a policy threshold, not a calculation. The floor is agreed with commercial leadership and applied to price changes, new listings, promotions or buys. Decisions that keep a line above the floor move through normal approval; decisions that would take it below are held for someone with the authority to agree, often with a note of why the exception is worth it.
Why it matters
Without a floor, margin erodes one reasonable-looking decision at a time. With one, teams can move routine decisions quickly and focus senior attention on the exceptions. The floor should reflect the category's role: a destination category may run a lower floor than a convenience one.
Illustrative example
The business and figures are illustrative, not customer data
A category sets a 30% gross-profit floor. A buyer proposes cutting a line from $10.00 to $8.50 to match a competitor; the line costs $6.20, so the new margin would be about 27%. The change is held for the category lead, who approves it for four weeks because the line is a known-value item that shapes how shoppers see prices across the range.
In twelfth
In twelfth, the category GP floor is one of the workspace guardrails, which owners and admins set. New lines below the floor are held for review rather than moving ahead as normal, and a price change that would take a line below it is held for review in the same way.
Related terms
Related on twelfth.ai
- twelfth for category managers
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