SaaS operators, what is the cost:earnings ratio of your SaaS?

Question

I'm interested in knowing what type of service you operate, how much it costs you each month, and how much it brings in.

danjc · Accepted Answer

I'm surprised there are no comments here, I think this is a very interesting question.
We are b2b and need to have high isolation between customers which means dedicated resources. Because of this, it's likely out our margins are lower than many other SaaS categories.
We target 80-90% margin on most of our subscription plans.

jwr · Answer

B2B SaaS here, if you are asking about the gross margin (revenue minus cost of goods sold), I've always kept it above 90%. I'm careful not to use expensive hosting (like AWS) and I keep a close eye on COGS at all times.

encoderer · Answer

70% gross margins is acceptable, 80% gross margins are normal, 90% are exceptional. Remember, in most cases you are losing 4% to payment processing right off the top.

jokethrowaway · Answer

50$ on Digital Ocean and it brings in 2-3k$ per month. I'm selling API access to data (the servers process plenty of requests, I need to scale them up every once and then).I've read about someone on linkedin with a 7$ VPS making 500k per year (half of that is selling data, the other half is talking to people via mail) but barely using the server, it's just to keep up a fancy dashboard.

huydotnet · Answer

Mine is $60 that bring in &plusmn;$600/mo

xmonkee · Answer

Onboarding and risk management tools for financial firms. Monthly spend is about $1500, which is about 10% of revenue. I can probably spend some time and bring that spend down to $1000 with some work (but currently time is better spent getting revenue up)Edit: I would like to add that with a combination of fly.io and digital ocean the actual server costs are way under $100. Most of the costs are paying for other Saas needed for the product (document analysis, emails etc) and tools (github, copilot, sentry, etc)

xory · Answer

B2B SaaS. 4% of our gross revenue goes to Azure (dev & prod). 25% of our gross revenue goes to payroll.

icedchai · Answer

I worked at a SaaS startup, where after 5 years, the monthly earnings would barely pay for the AWS bill and 1 mid level engineer. Gross profit was single digit percentage, based on the official COGS. COGS was likely low, since it expected to make the bad numbers look better. Most of the company got laid off. Even then, like 150% to 200% of revenue was going to payroll.

jot · Answer

I'm interested to hear differences between services doing resource heavy work e.g. video processing vs a more typical SaaS like a CRM.Should gross margin expectations be different?

SaaS operators, what is the cost:earnings ratio of your SaaS?

I'm interested in knowing what type of service you operate, how much it costs you each month, and how much it brings in.

B2B SaaS here, if you are asking about the gross margin (revenue minus cost of goods sold), I've always kept it above 90%. I'm careful not to use expensive hosting (like AWS) and I keep a close eye on COGS at all times.

70% gross margins is acceptable, 80% gross margins are normal, 90% are exceptional. Remember, in most cases you are losing 4% to payment processing right off the top.

Mine is $60 that bring in ±$600/mo

B2B SaaS. 4% of our gross revenue goes to Azure (dev & prod). 25% of our gross revenue goes to payroll.

I'm interested to hear differences between services doing resource heavy work e.g. video processing vs a more typical SaaS like a CRM.
Should gross margin expectations be different?