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Gross Margin Calculator

Gross margin with full COGS breakdown — hosting, APIs, payment fees, and direct customer success cost. Compare against category benchmarks.
Cost of Goods Sold (COGS)
Gross margin
80.5%
Revenue
$1.0M
Total COGS
$195K
Gross profit
$805K
VerdictExcellent. Top-decile SaaS gross margin. Highly scalable economics.
Industry benchmarks
  • Pure SaaS75–85%
  • Vertical SaaS70–80%
  • SaaS + services55–70%
  • Marketplace25–45% (take-rate × scale)
  • Hardware25–55%

What is the gross margin calculator?

Gross Margin = (Revenue − COGS) ÷ Revenue.

COGS includes everything you spend to deliver the service — hosting, third-party APIs, payment processing, and customer success effort directly tied to delivery (not retention).

Why this matters for founders & operators

Gross margin is a leading indicator of how scalable your economics will be at maturity. SaaS investors expect 75–85% at scale; below that, every dollar of growth costs more than it should.

Most early-stage SaaS companies have artificially low gross margins because of hosting overprovision, expensive third-party APIs, and customer success effort that's not yet efficient. That's fine if it's improving over time — concerning if it's flat.

How to use this calculator

  1. 1
    Include all delivery-tied costs in COGS

    Hosting, infrastructure, third-party APIs, payment fees, customer success effort directly delivering the service.

  2. 2
    Don't include sales, marketing, or G&A

    Those are operating expenses below the gross-margin line.

  3. 3
    Track gross margin trend

    Direction matters as much as level. Margin improving from 65% to 75% over 18 months is a great story.

  4. 4
    Break out by product or segment

    Blended margin hides the truth. Calculate by product line and customer segment to see where margin is coming from.

FAQ

What's a great SaaS gross margin?+
75–85% at scale is best-in-class. 65–75% is healthy. Below 65% suggests heavy services component or expensive infra.
Should customer success be in COGS?+
The portion directly tied to delivery (onboarding, technical implementation) is COGS. Retention work and account management are operating expenses.
Why is gross margin lower for marketplaces?+
Marketplaces are usually take-rate businesses. Their 'revenue' is the take-rate, not GMV. If you treat GMV as revenue, margin looks unrealistically low.
How does gross margin affect valuation?+
Significantly. Higher gross margin = higher multiple. SaaS at 80% margin trades at much higher multiples than SaaS at 50%.