Definition
Revenue minus cost of goods sold, expressed as a percentage—the fundamental measure of whether your business model makes sense before accounting for all those pesky operating expenses. VCs want this above 70% for SaaS.
Example Usage
Our gross margin is only 30% because we're essentially a services company cosplaying as a software startup.
Origin
Fundamental accounting terminology dating back centuries, applied rigorously to startup evaluation in 2000s
Fun Fact
Many startups inflate gross margin by conveniently forgetting to count customer success, support, and infrastructure costs.
Source: Accounting and financial analysis standards
Related Terms
Translate This Term
See “gross margin” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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