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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.

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We call it the 3, 7, and 10 rule.

3% on payment processing, subscription management and collection.

7% on AWS.

10% on product support, account management and retention.

If you’re fast growing this is about right. If you’re starting to slow down then you can afford to spend more time optimising these, eg 2, 4 and 9, giving you a GM of 85% which is elite for a B2B SaaS.

That’s great. I had never heard that framing before but I like it.

I like the % on AWS (or infra let’s say) because it is possible to be too cheap and get engineers to solve problems the clouds can offer you a solution off the shelf. Since the Engineers are making the decisions the may balk at spending $10k/m for something in a cloud but if it is framed as 0.1% ARR it can be put into perspective: this is 1/1000th of your infra spend, is it worth it? Or would you rather have X? The idea being to untie personal spending decisions and fear i to a business decision.

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