Calculate your gross profit margin
Want to improve your margins? We help fintech companies optimize their cost structure and pricing.
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Tip: Be honest about what goes into COGS. Many startups hide costs in G&A to inflate gross margins. Investors see through this immediately during due diligence.
Gross Margin = (Revenue – COGS) / Revenue x 100
Example:
Sources: Industry benchmarks from Bessemer, SaaStr, and company filings.
Gross margin determines the ceiling of your business. If gross margin is 30%, you have only 30 paisa per rupee to cover salaries, marketing, rent, R&D, and still make a profit. At 80%, you have 80 paisa. That difference is why software companies are worth 10-20x revenue while services companies are worth 1-3x.
The leverage question: Can you grow revenue without proportionally growing COGS? If yes (software, platform), you have operating leverage and margins improve with scale. If no (services, physical products), margins stay flat regardless of size. This is why investors obsess over gross margins.

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Frequently Asked Questions about Gross Margin Calculator
Gross margin is the percentage of revenue remaining after subtracting the direct costs (COGS) of delivering your product or service. A 70% gross margin means Rs 70 of every Rs 100 in revenue is available for operating expenses and profit.
For SaaS: cloud hosting (AWS, GCP, Azure), payment processing fees, customer support staff directly serving customers, third-party API costs, and data infrastructure costs.
Pure SaaS fintech should aim for 70%+. Payment companies typically see 40-60% due to interchange and processing costs. Lending fintechs target 50-70% depending on NPA levels.
Negotiate better vendor rates, automate support to reduce headcount-driven COGS, optimize cloud infrastructure, move to higher-margin pricing tiers, and reduce payment processing costs through volume discounts.