2025 SaaS Benchmarks Report by High Alpha
Contents
Introduction
Executive Summary
AI-Driven Market Rebound
Growth & Efficiency
SaaS Metrics & Trends
People
Founder Insights
Closing
Smaller SaaS Companies See Gross Margin Pressure
SOFTWARE GROSS MARGIN Early-Stage Gross Margins Declined Year Over Year, While the Margin Profile of More Mature Businesses Remained Consistent
! Change From 2024
Software Gross Margin
Less Than $1M ARR
$1-5M ARR
$5-20M ARR
$20-50M ARR
Greater Than $50M ARR
90%
! INSIGHTS
85%
Gross margins declined for early- stage SaaS companies — median gross margin was down 7% for those under $1 million ARR and 4% for those at $1-5 million ARR — while larger companies held steady near 80% . The gap highlights growing cost pressure from AI and infrastructure investments that smaller companies can’t yet absorb at scale. The decrease is even more striking when comparing companies under $1 million ARR from 2023 — a 12% decline in median gross margin.
80%
75%
70%
65%
60%
80% ! 10% 74% ! 7% 60% ! 5%
84% ! 4% 78% ! 1% 71% ! 1%
83% ! 3%
85% -
86% - 80% -
Upper Quartile
77% ! 4% 60% ! 7%
Median
79% -
70% ! 3%
70% ! 3%
Lower Quartile
Source: 2025 SaaS Benchmarks Report by High Alpha
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