Calculate gross margin and gross profit from revenue and cost of goods sold.
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Total revenue for the period.
Direct costs: hosting, support, infrastructure.
Gross Profit = Revenue − COGS
Gross Margin = (Gross Profit ÷ Revenue) × 100
Gross margin shows what percentage of revenue remains after direct costs. SaaS companies typically achieve 70-85%.
Enter values to calculate.
70-85% is typical. Below 70% suggests high infrastructure or support costs that need optimization.
Hosting, infrastructure, customer support, payment processing fees, and third-party software costs.
Gross margin excludes operating expenses. Net margin subtracts all expenses including R&D, S&M, and G&A.
It determines how much revenue is available to fund growth, R&D, and profits. Higher margins mean more operating leverage.