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When Gross Margins Matter

a16z Podcast

How Much Does It Really Cost to Deliver This Revenue?

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Gross margins is far more applicable to mature businesses and businesses that have very specific cogs. Cogs is cost of goods, which just like how much it costs for the product that's shipping out the door. I think there's a tendencyo to categorise things like sophor licenses in r andd, sometimes gana. But i looked at a company that that actually needed these sophora licenses for the uct to be deployed. So this is literally the definition of a variable cost to serve. It not only led to gross margins being off by five to ten %, but also, as you think about modelling your business forward, and and sort of thexpenses that you're

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