Gross Margin
Gross margin is revenue less the direct cost of delivering the product, expressed as a percentage of revenue.
Why It Matters
It sets the ceiling on profitability and is the first place the cost of serving AI shows up in a software company's accounts.
Related Terms
- Unit EconomicsUnit economics is the profit or loss on a single unit of business: one customer, one order or one transaction, once the direct costs of serving it are counted.
- AI Unit EconomicsAI unit economics is the profit or loss on a single customer or a single use of an AI product, once compute and support costs are counted against the price charged.
- Operating LeverageOperating leverage is the extent to which a company's costs are fixed, so that additional revenue falls disproportionately to profit, and lost revenue does the reverse.
- Inference CostInference cost is the expense of running a model to answer a request, driven by model size, the length of the input and output, and the hardware it runs on.
VANTAGE52 Coverage
Published reporting filed under the topics behind this concept.
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