How to Use the SaaS Pricing Margin
SaaS gross margin looks great on a pitch deck at "80%+" — but that number depends entirely on what you count as cost of goods sold. Hosting, support time, third-party tooling, and payment processing fees all scale with your customer count and eat directly into margin. This calculator gives you an honest per-customer and company-wide gross margin.
Step-by-Step Guide
- 1
Enter your monthly subscription price.
- 2
Enter hosting/infrastructure cost per user — servers, storage, bandwidth.
- 3
Enter support cost per user — allocate support team cost across your customer base.
- 4
Add your payment processing fee % and fixed fee (e.g. Stripe's 2.9% + $0.30).
- 5
Add any third-party tool costs per user — analytics, email, in-app chat, etc.
- 6
Enter your total customer count to see company-wide gross profit.
SaaS Pricing Margin Formula
Payment Fee = (Price × Fee %) + Fixed Fee Total COGS per User = Hosting + Support + Third-Party Tools + Payment Fee Gross Margin per User = Price − Total COGS per User Gross Margin % = (Gross Margin per User ÷ Price) × 100
Worked Example
Price: $79/mo. Hosting: $6. Support: $4. Tools: $2. Payment fee: 2.9% + $0.30 = $2.59. Customers: 500. Total COGS per User = $6 + $4 + $2 + $2.59 = $14.59 Gross Margin per User = $79 − $14.59 = $64.41 Gross Margin % = $64.41 ÷ $79 = 81.5% Total Monthly Gross Profit = $64.41 × 500 = $32,205
Understanding your result
Calculator results depend entirely on the information entered. For the most useful estimate, use current and accurate figures and include all costs that apply to your specific situation.
Frequently Asked Questions
What is a good gross margin for SaaS?
Best-in-class SaaS companies typically run 75–85%+ gross margin. Below 70% is often a signal that infrastructure, support, or third-party costs are eating too much into unit economics relative to typical software benchmarks.
What should I include in SaaS COGS?
Hosting/infrastructure, customer support directly tied to serving customers, payment processing fees, and any third-party services required to deliver the product (not sales, marketing, or general engineering/R&D, which are operating expenses, not COGS).
Should engineering salaries be in COGS or opex?
Convention varies, but most SaaS companies treat engineers building new features as opex (R&D) and only allocate a portion of DevOps/infrastructure-focused engineering time to COGS, since that work directly supports delivering the service to existing customers.
How does customer support cost scale with growth?
Support cost per user often decreases as you scale (self-serve docs, better onboarding, automation), but can spike if you add complex features or move upmarket to customers who need more hands-on support — track it as a per-user metric to catch drift early.
Does gross margin affect how much I can spend on acquiring customers?
Yes directly — LTV calculations use gross margin, not raw revenue, so a lower gross margin means a lower sustainable CAC even at the same subscription price.