Gross Margin Calculator

Industry presets

OpenView 2024 SaaS Benchmarks: median GM 73%, top quartile 80%+. Hosting+support is roughly half of COGS; cloud-cost optimisation (FinOps) is the dominant lever.

Industry Gross Margin Reference

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How to read the donut

1. Pick an industry preset closest to your business - SaaS, DTC, marketplace, services, or fintech.
2. Set unit revenue (price) and annual volume.
3. Slide each COGS line item. Watch the donut and live GM percentage shift in real time.
4. Compare your GM to the industry benchmark (top of the screen) - the delta tells you whether the room is in pricing or in COGS.
5. Press Lock margin to surface result insights; save snapshot to compare scenarios.

A Brief History of Gross Margin

In 2026, a Series B SaaS CFO sits down for a quarterly margin review and needs to decompose revenue into the COGS line items that actually drive margin. Gross margin as a metric goes back to mediaeval merchant accounting (Pacioli's 1494 'Summa de Arithmetica' codified double-entry bookkeeping). Modern SaaS COGS conventions were formalised by Bessemer's State of the Cloud reports (Byron Deeter, 2014-present) and OpenView's annual SaaS Benchmarks (Kyle Poyar, 2018-present), establishing the four canonical COGS buckets: hosting, support, third-party APIs, payment.

Bessemer Cloud Index Q4 2025 reports the median gross margin across the 70+ public SaaS index at 73%, with top-decile companies at 84-89%. The dispersion is driven primarily by hosting efficiency (cloud-architecture cost per request) and support automation (tickets per active user). Gross margin is the ceiling on operating leverage - a 50% GM business cannot scale to a 30% FCF margin without breaking the GM constraint.

DTC e-commerce gross margin follows a very different cost structure. Shopify Plus 2025 benchmarks (Loren Padelford) report median GM 45-55% across the platform's largest 5,000 stores. Product cost (32-38% of revenue) dominates. Returns (4-15% of revenue depending on category), shipping subsidies (8-15%), and payment processing (3%) round out the COGS picture. Top-quartile brands hit 60-70% via vertical sourcing and category selection.

Marketplace economics are unique because the marketplace prices as take rate (a percentage of gross merchandise volume). a16z's Marketplace 100 (2024 update) reports healthy take rates of 12-18%, with gross margin on the take rate of 70-85%. Payment processing (3-4% of GMV = ~25-30% of take) is the dominant COGS line; trust and safety operations scale with volume but compress at scale.

Professional services GM is dominated by billable labour. SPI Research's 2025 benchmark report (Dave Hofferberth, founder) puts services blended GM at 38-44%. Utilisation - the percentage of billable hours actually charged to clients - is the swing variable: every 5pp utilisation lift adds ~3pp to GM. Top consulting firms (Bain, McKinsey, BCG) hit 50%+ GM via premium pricing and utilisation discipline.

Vertical fintech is the highest-GM category in the tool, but the path to high margin is steep. Early-stage vertical fintechs carry GM under 50% because KYC and fraud operations are manually intensive. Once payment volume scales past $100M/year, interchange leverage and automated KYC/fraud kick in, taking GM to 80-90%. KeyBanc Capital Markets 2025 SaaS Survey (Devin Au, Brent Bracelin) tracks this trajectory across 100+ public and private fintech leaders.

The tool here uses live sliders for price, volume, and each COGS line item, so the donut and margin number respond in real time. Sensitivity analysis - the discipline of varying one input at a time to find the highest-leverage lever - was formalised by Robert Anthony at Harvard Business School in the 1950s and popularised in modern finance via Excel sensitivity tables and Monte Carlo tools (Crystal Ball, Vose ModelRisk). The donut is the visual entry point; the numbers below tell the full story.