SaaS Gross Margin Target Calculator
True SaaS gross margin includes hosting + customer success + support + payment processing + DevOps. Target 75-85% for public-ready SaaS. Below 70% = either infra problem or wrong product category.
| Revenue | — |
| Total COGS | — |
| Gross profit | — |
| Gross margin % | — |
| Hosting as % of revenue | — |
| CS+Support as % of revenue | — |
| Benchmark grade | — |
True SaaS gross margin includes hosting + customer success + support + payment processing + DevOps — not just hosting. Public SaaS benchmark: 75-85% (Bessemer Cloud 100 median 73%, top quartile 82%). Below 70% triggers VC concerns about infrastructure efficiency or product category fit.
What's Inside COGS
SaaS COGS: (1) Hosting — AWS/GCP/Azure infrastructure, CDN, storage. Target 8-15% of revenue. (2) Customer Success — salaries + tooling. Target 4-7% of revenue. (3) Support — agents + Zendesk/Intercom. Target 2-4% of revenue. (4) DevOps/SRE — on-call, monitoring. Target 2-4%. (5) Payment processing — 2.5-3% of revenue if Stripe direct. (6) Third-party SaaS COGS — APIs you resell (Twilio, SendGrid, etc.). Sum all these for true GM.
Improving Gross Margin
(1) Reserved/Savings Plans on AWS/GCP cuts hosting 30-50% vs on-demand. (2) Multi-tenant architecture vs single-tenant cuts hosting 50%+ for SMB segment. (3) Self-serve onboarding reduces CS cost per customer. (4) AI chatbot deflects 25-40% of support tickets. (5) Negotiate volume discounts with hosting provider at >$1M/yr spend. (6) Spin off services revenue into separate line item — don't drag down GM. Bessemer benchmark: top quartile SaaS hits 82%+ through disciplined COGS management.
Last updated May 2026. Sources: Bessemer State of the Cloud 2024.