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Gross Margin

Revenue minus cost of revenue (hosting, support, payment processing, PS delivery), as a % of revenue.

In depth

SaaS gross margin benchmarks: 75–85% (app software), 60–75% (usage-heavy infra), <60% flags a business model problem. Services-heavy revenue drags the blended number; report software GM separately.

Related terms

Rule of 40
Growth rate + free cash flow margin should sum to at least 40 for a healthy SaaS business.
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