Startup Metric
How gross margin works for SaaS and software businesses and why infrastructure and AI costs matter.
Core formula
Gross margin = (revenue − cost of revenue) ÷ revenue
SECTION 01
The useful way to interpret definition is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 02
The useful way to interpret formula is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 03
The useful way to interpret example is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 04
The useful way to interpret cogs is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 05
The useful way to interpret ai infrastructure is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 06
The useful way to interpret why it matters is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 07
The useful way to interpret common mistakes is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.
SECTION 08
The useful way to interpret improving margin is to connect the number to an actual business decision. Define the period, customer population, revenue basis, and costs consistently, then compare the metric over time and across meaningful cohorts.