What Is Gross Margin in SaaS?
Gross margin is revenue minus cost of goods sold (COGS), expressed as a percentage of revenue. SaaS COGS typically includes hosting, support, and third-party software. Healthy SaaS gross margins are 70–85%. High gross margin is what makes SaaS unit economics so attractive to investors.
Why it matters: this metric helps founders separate random variation from real business movement. Decisions improve when the metric is tracked in trend form, not one-off snapshots.
How to use it in practice: pair this metric with at least one upstream and one downstream signal. That way, you can explain why it changed and what action should come next.
In AI Co-Founder, this term appears in context with related indicators so you can move from definition to decision without switching tools.