SAAS COGS VS. OPEX

Summary from the TLDR Founders newsletter

Accurately categorizing costs as Cost of Goods Sold (CoGS) and Operational Expenses (OpEx) is key to calculating Gross Profit Margins (GPM), a crucial metric for SaaS scalability and profitability. This article provides a refresher on relevant P&L items, typical CoGS items in SaaS, and benchmarks for GPM. A GPM of 75-80%+ is considered good, with higher percentages potentially leading to better valuations at exit.