Skip to content
ENExplore Calculators

SaaS Gross Margin Calculator

Work out software gross margin after hosting, support and third-party costs of delivering the service.

About SaaS Gross Margin Calculator

Margin divides profit by revenue; markup divides the same profit by cost. They are routinely confused, so both are shown — a 50% margin is a 100% markup. Margin is what funds every fixed cost in a software business, and mispricing by a few points is the difference between scaling profitably and scaling losses.

Formula

SaaS Gross Margin

Margin % = (Subscription revenue − Cost of revenue: hosting, support and third-party fees) ÷ Subscription revenue × 100

Subscription revenue
Money received
Cost of revenue: hosting, support and third-party fees
Direct cost of delivering it

Worked example

With the default values below, SaaS Gross Margin Calculator returns SaaS Gross Margin of 78.00%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Subscription revenueminimum 0
600,000
Cost of revenue: hosting, support and third-party feesminimum 0
132,000

Results

SaaS Gross Margin
78.00%
Profit
$468,000.00
Markup on Cost
354.55%
Cost as Share of Revenue
22.00%

Step by step

  1. 1Values used
  2. 2SaaS Gross Margin
  3. 3SaaS Gross Margin= 78.00
  4. 4Profit= 468,000.00
  5. 5Markup on Cost= 354.55
  6. 6Cost as Share of Revenue= 22.00

Assumptions and limits

  • The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is SaaS Gross Margin calculated?

Margin % = (Subscription revenue − Cost of revenue: hosting, support and third-party fees) ÷ Subscription revenue × 100 Margin divides profit by revenue; markup divides the same profit by cost. They are routinely confused, so both are shown — a 50% margin is a 100% markup.

Why does SaaS Gross Margin matter?

Margin is what funds every fixed cost in a software business, and mispricing by a few points is the difference between scaling profitably and scaling losses.

What values do I need to enter?

This calculator takes 2 inputs: Subscription revenue, Cost of revenue: hosting, support and third-party fees. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

Related Calculators

SaaS Gross Margin Calculator | Calcrivo