What moves SaaS gross margin
Cloud infrastructure cost per customer (most material at scale), payment processing fees, customer-facing third-party APIs (Twilio, Stripe, Snowflake, etc.), customer support staffing, and the operations / SRE labor required to keep production reliable. R&D, sales, and marketing are operating expense, not COGS — they live below the gross-margin line.
Why allocation matters here
Two SaaS companies with identical economics can report very different gross margins depending on whether dev / staging cloud spend is incorrectly allocated to COGS, whether commitment-discount savings are credited to production, and whether internal analytics workloads are excluded. The allocation policy is part of the gross-margin claim.
Who tovin.io is for
Frequently asked
What's a healthy SaaS gross margin?
Pure-play SaaS benchmarks land around 75–80%. Vertical SaaS, infrastructure-heavy SaaS, and AI-product SaaS often run lower (60–70%) because infrastructure intensity is higher.
Does cloud commitment discount improve gross margin?
Yes — at the cost of flexibility. Most EDP / Savings Plan programs move 5–20% of cloud cost off the gross-margin line, but only if the commit is correctly sized.