We’re fluent in startup finance. Now you can be too.

Learn more about common financial (and startup) terms here. To learn more about Pilot, fill out the form below.

Oops! Something went wrong while submitting the form.
Gross Margin

What is Gross Profit Margin?

Your gross margin is how much you make, as a percentage, after you pay the cost directly associated with making your products or services. Gross margins tend to vary by industry, so a high or low gross margin isn’t necessarily good or bad. But software as a service (SaaS) companies tend to have low direct costs and high gross margins.

To calculate your gross profit margin, start by determining your gross profit — your revenue minus cost of goods sold (COGS) — and then divide that by your revenue.

As a founder, you might initially focus on your burn rate, annual recurring revenue, and growth. However, as you work through the early stages, increasing your gross margin could become more important for sustaining your growth. 

You can think of an increasing gross margin as an increasingly efficient operation. It leaves you with more money left over to invest in operating expenses, such as marketing and headcount. 

Sign up for Pilot Bookkeeping

Signing up for Pilot is easy. We think once you experience truly stress-free financial processes, you won’t want to go back.

Oops! Something went wrong while submitting the form.
Close icon

Let's get in touch

Our experts can help you find the right solutions. Please provide a bit of information and we’ll be in touch.

Thank you!

We’ll be in touch via e-mail.

If you have a question, please feel free to e-mail us at info@pilot.com

Oops! Something went wrong while submitting the form.