Gross Margin

Your gross margin is how much you make, as a percentage, after you pay the cost directly associated with making your products or services. Gross margins tend to vary by industry, so a high or low gross margin isn’t necessarily good or bad. But software as a service (SaaS) companies tend to have low direct costs and high gross margins.

Gross Margin refers to the percentage of revenue left after deducting the direct costs associated with producing goods or services, providing a measure of profitability and efficiency in small business operations. It is calculated by subtracting the cost of goods sold (COGS) from the total revenue and dividing the result by the total revenue, and it helps businesses assess their pricing strategies, cost management, and overall financial performance.