Gross Profit Margin

Take revenue, subtract COGS, and you have gross profit. Divide that by revenue and you have gross margin. Some people call it gross profit margin. Same thing.

$$\text{Gross Margin} = \frac{\text{Revenue} - \text{COGS}}{\text{Revenue}}$$

With the calculator's numbers, $1,000,000 of revenue and$400,000 of COGS leave $600,000 of gross profit. That's a 60% gross margin. 60¢ of every revenue dollar is left after you've paid to deliver the product.

That 60¢ pays for everything else. R&D, sales, admin, and then, if you're lucky, profit.

Higher is better. This is also the margin a CTO moves most directly. Cloud bills, third-party APIs, how much support the product needs. That's all you.