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    What costs go into each bucket for a SaaS startup?

    Same question, your business

    Quick answer

    For SaaS, direct costs are mostly cloud and support, are your tools and workspace, sales & marketing is your growth engine, and G&A is the back office. Product development sits slightly apart as R&D.

    The breakdown

    • Direct costs (COGS): cloud/hosting, customer support, payment-gateway fees, usage-based third-party services (email, SMS, APIs), and any AI/compute costs tied to usage.
    • Overheads: software subscriptions your team uses, workspace, IT, and general tooling.
    • Sales & marketing: ad spend, sales team salaries and commissions, CRM and marketing tools, content and events.
    • G&A: finance, legal, HR, admin salaries, accounting and compliance costs.
    • R&D (kept separate): your engineering and product team building the software — a big investment, spread across all customers, not a per-customer cost.

    Our honest take

    The classic SaaS mistake is burying usage-based cloud or AI compute costs in “overheads.” If it grows with each customer, it's a direct cost — put it there, or your margins will look better than they are.