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Hey {{first_name}} 👋, hope you had a great week! I bet you missed me, but I was so busy cooking something that you’re going to love. Stay tuned for more info! 👀

In the last issue, we discussed why tracking Days Payable Outstanding (DPO) matters, and now we are moving with the next topic from Cash Flow & Expenses content.

Let’s talk about ⬇️

Yes, I know it’s not flashy like revenue growth—but hear me out:

Your gross margin isn't just a number on your income statement. It's a powerful metric telling you exactly how much cash you're actually keeping from every dollar you make.

But most SaaS founders overlook it or—even worse—measure it incorrectly.

Today, let’s get crystal clear on:

⚡️ What exactly is Gross Margin?

🧮 Quick Gross Margin formula (with SaaS example)

📌 Why Gross Margin matters (especially in SaaS)?

🚧 The BIG mistake SaaS companies make with Gross Margin

🎯 How to leverage Gross Margin for growth?

Let's dive in 👇

Gross margin (aka gross profit ratio) measures how much money you keep after subtracting the direct costs involved in delivering your SaaS product.

Simply put:

In SaaS, direct costs (COGS) typically include:

Here's what's NOT included:
Marketing spend, sales commissions, office rent—those fall under operational expenses.

Here’s the simple math behind it:

Gross Margin (%) = (Revenue – COGS) ÷ Revenue × 100

Example:

Gross Margin = ($1.5M – $360k) ÷ $1.5M × 100 = 76%

That means for every $1 your SaaS brings in, you're keeping 76 cents.
Pretty solid.

I'm Aleksandar, fractional CFO at Fiscallion, where we help founders like you achieve financial clarity, streamline reporting, and build investor-ready forecasts.

Ready to level up your finances?

High gross margins show investors, VCs, and analysts that your SaaS is scalable and financially healthy.

Here’s what they’re looking for:

For context, the median SaaS gross margin is about 73%, but industry leaders regularly hit 80–90%.

Compare that with restaurants (~27%) or automotive (~9%), and you'll quickly see why SaaS companies are so attractive to investors.

Most errors happen because founders aren't clear on what counts as COGS.

For example:

Misclassifying these expenses skews your gross margin—and leads to bad strategic decisions or even investor mistrust.

Solution?

Your gross margin isn't just a percentage—it’s a roadmap for growth.

Use your gross margin data to tell your company’s story clearly:

✅ “Here’s how efficiently we operate...”
✅ “Here’s exactly where we’ve improved...”
✅ “Here’s why investing in our SaaS is a great bet...”

This metric empowers you with the confidence to make growth decisions backed by data—not guesswork.

I hope that clears things up and gives you actionable insights to level-up your SaaS financial strategy.

Got more questions on gross margin—or another SaaS finance topic? Just hit reply!

I'm here to help :)

Chat soon

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