Your implementation and professional services teams could be quietly eroding your gross profit margin — and most SaaS leaders don’t even realize it.
In episode #324, Ben Murray explains how unclear COGS structure, mispriced services, and untracked internal resources can distort your unit economics and lower your overall SaaS valuation.
If your service margins are negative or your gross profit doesn’t match expectations, this episode shows you exactly where to look — and how to fix it.
What You’ll Learn
- Why implementation teams often kill gross profit without you noticing.
- How to calculate services margins by setting up clean revenue streams and COGS cost centers.
- The right services gross margin target.
- Why doing “free” onboarding work can destroy your unit economics.
- How underpricing services or blending resources (support, CS, services) skews your financial reporting.
- The balance between protecting ARR and monetizing implementation revenue.
- How to fix your SaaS P&L for visibility into margins by revenue stream.
Why It Matters
- For CFOs & Founders: Misclassified or underpriced services directly lower gross profit, cash flow, and company valuation.
- For Finance Teams: Clean COGS and OPEX separation creates accurate financial modeling, ARR margins, and retention-linked profitability.
- For Investors: Understanding margins by revenue stream signals financial discipline and scalability.
- For Operators: Properly scoped and priced services keep customer onboarding efficient and profitable.
Key Takeaways
- Every SaaS company should know gross margin by revenue stream (subscription, usage, services).
- Services losing 20–30% gross margin dilute your financial performance and cash flow forecasting.
- Accurate classification drives better SaaS metrics, including CAC payback, Cost of ARR, and LTV:CAC.
- A well-structured financial system is your best defense against margin erosion.
Resources Mentioned
Episode 323: Should Professional Services Be COGS or OPEX?
SaaS Metrics Foundation Course: https://www.thesaasacademy.com/the-saas-metrics-foundation
Quote from Ben
“If you don’t know your margins by revenue stream, you can’t manage them — and services might be the silent killer of your gross profit.”
