What “good” looks like, by business model
A 70% gross margin is weak for software and excellent for hardware. Use the ranges for your model, not someone else's. These are the green and amber ranges our Model Health Score uses for each industry edition: rules of thumb for early-stage companies, not market data.
| Business model | Revenue engine | Healthy gross margin | Healthy monthly churn |
|---|---|---|---|
| SaaS / Subscription | Customers x price, minus churn, plus expansion = MRR | 70%–90% | up to 3% |
| Marketplace | Buyers x orders x order value x take rate | 60%–85% | up to 6% |
| E-commerce / DTC | First + repeat orders x order value, minus returns | 40%–65% | up to 7% |
| AI Startup (usage-based) | Accounts x platform fee + usage units x price | 55%–85% | up to 3% |
| Fintech (payments) | Merchants x payment volume x take rate | 30%–60% | up to 2.5% |
| Services / Agency | Clients x retainer + projects x project fee | 35%–60% | up to 4% |
| Hardware + subscription | Devices sold x price + subscribers x plan | 35%–70% | up to 2% |
Churn is the share of customers (buyers, merchants, accounts) lost each month, as defined for each model. For hardware it applies to subscriptions.
SaaS / Subscription
Sample: Loopdesk Inc., B2B customer-support software
Marketplace
Sample: Tradelane Inc., B2B wholesale marketplace for independent retailers
E-commerce / DTC
Sample: Northleaf Goods Ltd., direct-to-consumer sustainable home goods
AI Startup (usage-based)
Sample: Promptly AI Inc., AI automation for customer-support teams, priced per seat plus usage
Fintech (payments)
Sample: Ledgerly Pay Ltd., payments and invoicing for small businesses
Services / Agency
Sample: Brightforge Studio Ltd., product design and development studio on monthly retainers
Hardware + subscription
Sample: Voltwise Inc., smart home energy monitor with an app subscription