Friday, March 10, 2017

How we calculate gross margins for our cloud telephony startup

In my previous post on gross margins, I discussed on what is a good gross margin for a SaaS startup.

In this post I will detail the line items we use for calculating our gross margins. Not every startup needs to follow this. Every startup has their own way of calculating gross margins. This is just our way.

Gross margin line items

  • Bandwidth charges
  • Data center charges
  • Physical server costs
  • Telco costs
    • PRI charges
    • SIP trunk charges
    • SMS costs
    • Toll free costs 
  • Software costs
    • CRM costs
    • Support software
    • NOC team costs
  • Training costs 
When compared with other SaaS products, we have an extra line item of telco costs. This is because we run on top of telco networks. Other products will not have this line item.
Also, since one of our products is an enterprise product, we also include training costs while calculating our gross margins.
Our new product for the US market, will have lesser costs and higher margins because of its DIY nature.