Work out software gross margin after hosting, support and third-party costs of delivering the service.
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.
SaaS Gross Margin
Margin % = (Subscription revenue − Cost of revenue: hosting, support and third-party fees) ÷ Subscription revenue × 100
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.
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.
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.