What is Gross Margin?
Definition
Gross Margin
Gross Margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS), showing the core profitability of a product.
Detailed Deep Dive
Gross Margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS). High gross margins (e.g. >80% in SaaS) are prized because they leave more capital to invest in sales and expansion.
Frequently Asked Questions
Q:Why do VCs love high gross margins?
Higher gross margins (e.g. >80% in SaaS) mean more money can be reinvested into sales, marketing, and expansion.
Q:What constitutes COGS for software?
Server hosting costs, customer support salaries, and third-party APIs integrated into the product.
Quick Facts
- CategoryMetrics
- Key ApplicationProduct unit economics assessment
Coverage Trend12 Weeks
12w agoToday
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Gross Margin Media Coverage & Intelligence
TechCrunch AIJun 24, 2026
Cerebras stock plunges after earnings as CEO says margin outlook was misunderstood
In its first earnings report since going public, the AI chipmaker forecast a narrower gross margin in its core business, scaring investors.