# SaaS Gross Margin Calculator

URL: https://www.paydude.io/resources/tools/saas-gross-margin-calculator
Type: Free interactive calculator
Summary: Enter revenue, hosting, support and payment fees to get your true gross margin, with each cost shown as a share of revenue.

Gross margin counts only the costs that scale with customers. Salaries, marketing and office costs sit below the line — putting them in cost of goods sold is the most common way this number gets computed wrongly.

## Summary

Healthy SaaS gross margin is 75–85%; AI-heavy products run lower. Only costs that scale with customers belong in COGS. Payment processing is COGS and is frequently filed as overhead instead. Every point of gross margin funds everything else in the business.

## What counts as cost of goods sold

**Above and below the gross margin line**

| In COGS | Not in COGS |
| --- | --- |
| Hosting and infrastructure | Engineering salaries |
| Third-party APIs charged per use | Marketing and advertising |
| Payment processing fees | Office and admin |
| Customer support and success | Sales salaries and commission |
| Data and content licensing per customer | Product design |

The test is whether the cost rises when you add a customer. Hosting does. Your designer's salary does not.

## Benchmarks

**Typical gross margin by product type**

| Product | Gross margin |
| --- | --- |
| Pure software SaaS | 80–90% |
| SaaS with meaningful support | 75–85% |
| AI-assisted product | 65–80% |
| AI-native product | 50–70% |
| Marketplace or payments-heavy | 20–50% |

Below about 70% for a software product, the usual causes are support costs that scale too steeply with customers, an infrastructure setup that has never been reviewed, or payment fees on a low price point.

## Where payment fees sit

At 2.9% + 30¢ on a $29 plan, processing costs about $1.14 per customer per month — roughly 3.9% of revenue. On a $10,000 MRR business that is $390 a month, or nearly 4 points of gross margin.

> **The cost you can change this week:** Most COGS lines require engineering work to reduce. Payment processing does not — moving from 2.9% + 30¢ to 2.6% + 25¢ on a $29 plan recovers about 0.4 points of gross margin for the cost of an integration.

## Why gross margin decides everything else

Gross profit is what funds engineering, marketing, and eventually a founder salary. At 80% margin, $100,000 of revenue leaves $80,000 to run the business. At 60% it leaves $60,000 — the same revenue, a third less to work with.

**Take a bite out of COGS** Lower published rates on both the percentage and the fixed fee. — [See Paydude pricing](https://www.paydude.io/pricing)

## Frequently asked questions

### What is a good gross margin for SaaS?

75–85% is the healthy band for a software product, and above 85% is excellent. AI-native products commonly run 50–70% because inference dominates COGS — that is a different cost structure rather than a worse business.

### Do salaries belong in cost of goods sold?

Support and customer success salaries do, because they scale with customer count. Engineering, sales, marketing and admin salaries do not — they sit below the gross margin line as operating expenses.

### Are payment processing fees part of COGS?

Yes. They are incurred per transaction and scale directly with revenue, which is the definition of a cost of goods sold. Filing them as overhead is common and quietly flatters the margin by several points on low-priced plans.

### How do I improve gross margin?

In rough order of effort: renegotiate or switch payment processing, review infrastructure spend and reserved capacity, reduce support load through documentation and product changes, and raise prices. The first requires no engineering at all.