Gross margin benchmarks vary enormously by industry. A 25% gross margin is excellent for a restaurant but alarming for a SaaS company. Here are 2024 benchmarks across the most common sectors.
Gross margin benchmarks by industry
| Industry | Low | Average | Excellent |
|---|---|---|---|
| SaaS / cloud software | 60% | 72% | 80%+ |
| Professional services | 45% | 62% | 75%+ |
| E-commerce (own brand) | 35% | 48% | 60%+ |
| E-commerce (reseller) | 15% | 25% | 35%+ |
| Mobile / consumer apps | 65% | 75% | 85%+ |
| Financial services | 50% | 68% | 80%+ |
| Healthcare / life sciences | 40% | 58% | 70%+ |
| Manufacturing | 15% | 28% | 40%+ |
| Food & beverage | 20% | 35% | 50%+ |
| Retail (specialty) | 20% | 38% | 55%+ |
| Construction | 10% | 20% | 30%+ |
| Media / publishing | 45% | 62% | 75%+ |
Why SaaS gross margins matter most
For SaaS, gross margin determines long-term profitability potential. Public SaaS companies at scale (>$100M ARR) average ~72% gross margin. Below 60% and the business typically cannot achieve the 20–25% EBIT margins required for premium public market multiples.
The COGS components that compress margin
For SaaS: hosting/infrastructure, customer support (if included in COGS), third-party API costs, and payment processing fees. For retail: product cost, inbound freight, and packaging. For services: consultant/employee direct labour time.
Use the gross profit margin calculator to compare your margin against these benchmarks.