{
  "rogueId": "sales.gross_margin",
  "slug": "gross_margin",
  "domain": "sales",
  "defaultLabel": "Gross Margin",
  "description": "Recognized revenue minus cost of goods sold (COGS), divided by recognized revenue, expressed as a percentage. The single best read on whether the business model can ever generate operating leverage — a low gross margin caps every downstream efficiency metric (CAC payback, LTV/CAC, Rule of 40). For SaaS, COGS includes hosting, third-party software, customer support, and customer-success cost-of-service. Common pitfall: omitting customer success from COGS inflates the margin and breaks comparability with peer benchmarks. Anchored to KBCM/Sapphire SaaS Survey 2024 §Gross Margin.",
  "fieldType": "percentage",
  "unit": "%",
  "maturity": "general",
  "suggestedForStages": [
    "seriesA",
    "seriesB",
    "seriesC",
    "public"
  ],
  "defaultOwningFunctions": [
    "Finance"
  ],
  "stageRelevance": {
    "seriesA": "core",
    "seriesB": "core",
    "seriesC": "core",
    "public": "core"
  },
  "definitionSource": {
    "tier": "published",
    "sourceName": "KBCM/Sapphire SaaS Survey 2024 (15th Annual)",
    "sourceUrl": "https://www.cfodesk.co.il/wp-content/uploads/2024/10/2024_kbcm_sapphire_saas_survey.pdf",
    "sectionRef": "Gross Margin",
    "publicationDate": "2024-09-01",
    "attributionNotice": null
  },
  "benchmark": {
    "p25": 65,
    "median": 72,
    "p75": 81,
    "unit": "%",
    "sourceName": "KBCM/Sapphire SaaS Survey 2024 (15th Annual)",
    "sourceYear": "2024",
    "higherIsBetter": true
  },
  "formula": "Gross Margin = ((Recognized Revenue − COGS) / Recognized Revenue) × 100. COGS for a SaaS business: cloud / hosting infrastructure, third-party data and APIs called for delivery, customer support, customer success cost-of-service, and any directly-attributable delivery personnel. Excludes R&D, S&M, and G&A.",
  "whyItMatters": "Caps every long-term efficiency metric — Rule of 40, LTV/CAC, CAC payback all run off contribution margin which derives from gross margin. Board uses it to verify the unit economics are real before debating S&M investment levels.",
  "interpretationGuidance": "Per KBCM/Sapphire SaaS Survey 2024 §Gross Margin, healthy SaaS gross margin is 70–80%; > 80% is best-in-class infrastructure leverage; < 65% usually signals heavy services revenue or inefficient COGS (often customer-success scaling linearly with customer count). Sub-70% companies must show a credible path to 70%+ by next funding milestone or face valuation pressure.",
  "relatedKpiIds": [
    "sales.total_revenue",
    "sales.arr",
    "sales.cac_payback_period",
    "operations.rule_of_40",
    "sales.growth_rate_yoy"
  ]
}