GASP
Core Efficiency Metrics Outcome Efficiency

Gross Margin

Gross Margin: Revenue minus cost of goods sold (COGS), as a percentage of revenue. Measures profitability after direct delivery costs.

Formula

Gross Margin = (Revenue (GAAP) - COGS) / Revenue (GAAP) × 100
GM-O = (Revenue − COGS − Support − CS − Implementation − Onboarding) / Revenue × 100
GM-M = (Revenue − COGS) / Revenue × 100
GM-M = GM-O + (Support + CS + Implementation + Onboarding costs) / Revenue × 100

Benchmarks

  • Below 60%: Low, may indicate infrastructure-heavy or services-heavy business
  • 60-70%: Moderate (Seed/Series A acceptable while scaling)
  • 70-80%: Good, typical for SaaS (Most VCs require 70%+ for investment)
  • 75-80%: Series B+ expected, attractive to investors
  • 80-85%: Best-in-class (commands valuation premium)

What It Tells You

How much of each dollar of revenue is available after delivery costs. Higher margins = more scalable business.

Dual-Lens: Operating / Market Forms

This metric has two governed forms derived from the same Commercial Event Ledger using Attribution Taxonomy Layer tags.

Operating Form: Contribution Margin (GM-O)

Contribution Margin is revenue minus all variable costs per customer. It shows true per-customer profitability after all costs that scale with the customer base.

CEL Source:
`Revenue_Event`, `Cost_Event`
ATL Inclusion:
`cost_function` ∈ (`Infrastructure`, `Support`, `Success_Engineering`, `Implementation`, `Onboarding`)
GM-O = (Revenue − COGS − Support − CS − Implementation − Onboarding) / Revenue × 100

What it tells you: The operating metric because it shows how much profit each customer actually generates after all variable delivery costs.

Market Form: SaaS Gross Margin (GM-M)

SaaS Gross Margin is revenue minus COGS only — hosting, infrastructure, and payment processing. It matches financial statement reporting and investor benchmarks.

CEL Source:
`Revenue_Event`, `Cost_Event`
ATL Inclusion:
`cost_function` = `Infrastructure`
GM-M = (Revenue − COGS) / Revenue × 100

What it tells you: The market-comparable gross margin that investors expect at 70%+ for SaaS businesses.

Bridge

GM-M = GM-O + (Support + CS + Implementation + Onboarding costs) / Revenue × 100

The delta (GM-M − GM-O) is the **Services Drag** — the cost of running a human-intensive customer operation. Declining delta over time signals increasing automation and self-serve adoption. SaaS Capital 2025 guidance on COGS allocation supports both approaches; VCs typically expect 70%+ SaaS gross margin (GM-M) while internal teams should track contribution margin (GM-O) for pricing and unit economics. ---

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Sources

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GASP Standard v1 · Last updated

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