What is Gross Margin?
Definition
Gross Margin is the percentage of revenue remaining after subtracting the direct costs of delivering your service (COGS).
Formula
Gross Margin % = ((Revenue - COGS) / Revenue) × 100
Example:
Revenue: $100,000 | COGS: $20,000
Gross Margin = 80%
SaaS Benchmarks
Above 80% - Excellent (typical for mature SaaS)
70-80% - Good (typical for growing SaaS)
Below 70% - Needs improvement