SaaS Metrics School

The Dirty Secrets Behind SaaS Gross Margins

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Your gross margin might not be telling the truth.

In episode #327, Ben Murray exposes the seven “dirty secrets” that distort SaaS gross margins — from incorrect COGS coding to missing allocations for shared resources and misclassified expenses. Whether you’re a CFO, finance lead, or operator, you’ll learn how to clean up your P&L and get accurate unit economics that reflect your true performance and valuation.

What You’ll Learn

  • The 7 big offenders that make SaaS gross margins misleading.
  • How to correctly code payment processing fees (Stripe, ACH, wire) under DevOps in COGS.
  • The difference between internal-use software and third-party apps embedded in your product.
  • How to classify customer success — adoption-focused vs. account management.
  • Why demo and test environments must be allocated properly between departments.
  • How to ensure fully burdened expenses (wages, taxes, benefits, bonuses) are coded correctly.
  • The impact of co-mingled headcount on margins by revenue stream.
  • Why department leaders belong in the departments they manage.

    • Why It Matters

    • For Founders: Clean accounting drives higher (or preserved) company valuation and investor confidence.
    • For Finance Teams: Accurate COGS and gross profit ensure your SaaS metrics are reliable.
    • For Operators: Clear expense allocation helps identify efficiency opportunities in support, services, and DevOps.
    • For Investors: Properly structured financial systems and accounting practices make due diligence faster and cleaner.

      • Key Takeaways

      • Misclassified expenses can make your gross margin appear stronger or weaker than it really is.
      • Always differentiate between OpEx and COGS — the foundation of credible financial modeling.
      • Track margins by revenue stream (subscription, usage, services) for true business insight.
      • Ensure your P&L reflects fully burdened costs per department — including contractors.
      • Clean financial data = higher trust from investors and buyers.

        • Resources Mentioned

        SaaS Metrics Foundation Course: https://www.thesaasacademy.com/the-saas-metrics-foundation

         

        Quote from Ben

        “Your P&L doesn’t lie — but bad coding does. If your COGS and OpEx aren’t clean, your gross margin isn’t either.”

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        SaaS Metrics SchoolBy Ben Murray
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