Deckmetric
    Jump to letterABCDEFGHIJKLMNOPQRSTUVWXYZ
    Metrics & KPIs
    Entry
    Global · Global

    Gross Margin

    Also called: Gross profit margin

    TL;DR

    The percentage of revenue remaining after subtracting cost of goods sold (COGS), reflecting the unit economics of delivering the product.

    Gross margin is the revenue left over after the direct costs of delivering the product, hosting, customer support, payment processing, third-party services. It's the most fundamental unit-economics measure: low gross margin caps how much the company can spend on sales, marketing, R&D, and operations.

    SaaS gross margin typically runs 70 to 85%; transactional businesses 30 to 60%; e-commerce and marketplaces vary widely depending on take rate. The trend matters as much as the level, gross margin should expand as the company scales.

    Formula

    Gross Margin = (Revenue − COGS) ÷ Revenue
    • Revenue , Net revenue in the period
    • COGS , Direct cost of delivering the product (hosting, support, processing)

    Worked example

    SaaS revenue $10M, COGS (hosting + customer support + payment processing) = $1.8M. Gross margin = ($10M − $1.8M) ÷ $10M = 82%. Marketplaces typically run 50 to 70%; pure SaaS 75 to 85%; managed services 30 to 50%.

    Common pitfalls

    • •Excluding important direct costs (support, infrastructure) from COGS.
    • •Comparing gross margin across business models that don't compare.
    • •Ignoring gross margin trend when it's quietly compressing.

    When this shows up in a pitch deck

    Gross margin appears on the Financials and Unit Economics slides; weak gross margin caps the rest of the model.

    See Gross Margin in context

    Gross Margin shows up most often in these scoring rubrics and investor profiles, jump straight to who cares about it and how to pitch them.

    In VC frameworks

    Tiger Global

    Pitch deck framework

    Family Office

    Pitch deck framework

    Related terms

    LTV

    Lifetime Value, the total margin a customer is expected to generate over their entire relationship with the company.

    CAC Payback Period

    The number of months required for the gross profit from a customer to repay the cost of acquiring them.

    Rule of 40

    A SaaS health benchmark: revenue growth rate plus profit margin should sum to at least 40%.

    Burn Multiple

    Net new ARR divided by net burn, the dollars of capital consumed per dollar of new ARR generated.

    Take Rate

    The percentage of gross transaction value a marketplace or platform retains as revenue, usually charged to the supply side, the demand side, or both.

    Pitch deck pillar pages

    Long-form deep dives on the slides Gross Margin most often shows up on.

    Pitch Deck Traction Slide

    Build a traction slide that proves the business is working: stage-appropriate metrics, the chart shape investors expect, and three failure patterns to avoid.

    Use Gross Margin in your next pitch deck

    Deckmetric scores your pitch across 10 VC frameworks and against 8 investor types.