Gross Margin

Gross margin is the percentage of revenue left after you subtract the direct cost of delivering your product or service, the cost of goods sold (COGS). If you charge 100 EUR and it costs 20 EUR to deliver, your gross margin is 80%. It measures how much each sale contributes before any overhead, marketing or salaries.

The trick is knowing what actually counts as a direct cost. Say you're running a small SaaS and your bookkeeping lives in Moneybird: your hosting bill from Supabase, the support seats, the payment-processing fees, all of that is COGS and eats into margin. Your office rent and your ads spend do not, they sit below the line.

Gross margin shapes everything about how a business can grow. High-margin businesses, like software, keep most of every sale to reinvest, which is why they scale so fast. Low-margin businesses must move huge volume to make the same money. For a founder, knowing your true gross margin tells you how much room you have to spend on acquiring customers and still come out ahead.

Watch it over time. Say you wire your monthly revenue and delivery costs into a Databox board and the margin line drifts down quarter on quarter, that is costs creeping into delivery, and no amount of extra revenue will fix a leaky margin.