Average product margin is the gross margin across the items you sell, weighted by what actually sold.
Above about 30% is a reasonable target where products are a real part of the business.
The average is the least interesting part
A healthy average routinely contains items sold below cost, carried by items sold well. The average tells you the business works; the spread tells you where it works and where it does not.
Reading down the margin column in inventory is the version of this figure you can act on. The average is the summary of a decision you have not made yet.
Where margin quietly goes
A supplier price moved and the sell price did not.
A discount applied once during a busy week and never removed.
A markup mistaken for a margin. A 40% markup produces roughly a 29% margin — see markup and margin, which is the most expensive arithmetic mistake in the trades and the one that hides best inside an average.
Against labour
For most service businesses, product margin and labour margin behave differently and should be looked at separately. Parts have a supplier price you can check; labour has an estimate you set.
Blending them into one gross margin figure hides which of the two is moving, which is why gross margin is worth reading alongside this rather than instead of it.
Available where inventory tracking is enabled for your workspace.