Gross Margin
Definition
Gross Margin: Gross margin is revenue minus the cost of goods sold (COGS), expressed as a percentage of revenue. For SaaS companies, COGS typically includes hosting, support, and customer success costs. High gross margins (70-80%+) are expected in software businesses.
Example Usage
“Our gross margin improved from 65% to 78% after we optimized our cloud infrastructure costs.”
Common Misconceptions
Related Terms
Unit Economics
Unit economics refers to the direct revenues and costs associated with a single unit of a business (a customer, product, or transaction). Positive uni...
CAC Payback Period
CAC payback period is the number of months required to recover the cost of acquiring a customer. It's calculated by dividing CAC by the monthly gross...
Contribution Margin
Contribution margin is revenue minus variable costs, showing how much each sale contributes to covering fixed costs and profit. It's expressed as a do...
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