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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%
  • Free, no signup
  • Runs in your browser — nothing is stored
  • Shareable link

How to use it

  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.

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 it matters for founders

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.

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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%.