Demand for SaaS solutions has been growing exponentially over the past few years with both large and small businesses taking advantage of modern technologies. Understanding the common types of SaaS solutions is important in picking the right solution for a business. SaaS is the top layer of the cloud computing pyramid and … Read more
Introduction A CRM (Customer Relationship Management) system has become an essential piece of software for enterprises that want to effectively manage interactions and relationships with their potential and existing customers. CRMs help businesses streamline processes, stay connected with their customers and improve profitability. The ultimate goal of a CRM is to improve … Read more
Introduction Many users find SaaS terminology confusing at first, especially people new to cloud technologies. Understanding SaaS terminology is essential in building a solid SaaS strategy or buying SaaS services. Below we outline all of the important terminologies and acronyms related to SaaS and provide a brief overview of each. Some of … Read more
Customer Lifetime Value LTV What is it? How to calculate it? What is LTV? Customer Lifetime Value, usually referred as LTV (sometimes as CLTV or CLV) measures the profit your business makes from any given customer. The purpose of the customer lifetime value metric is to assess the financial value of each … Read more
Average Revenue Per Account ARPA What is it? How to calculate it? What is ARPA? Average Revenue per Account (sometimes known as Average Revenue per User or per Unit), usually abbreviated to ARPA, is a measure of the revenue generated per account, typically per year or month. You could also say that … Read more
Monthly Recurring Revenue MRR What is it? How to calculate it? What is MRR? Monthly Recurring Revenue, almost always referred as MRR, is probably the most important metric at all of any subscription business. It’s what makes this business model so great. Once you acquire a new customer you got an recurring … Read more
Customer Acquisition Cost CAC What is it? How to calculate it? It’ll be tough for any business to succeed if it doesn’t have any customers. Customers play one of the most important roles in the business as they often function as brand ambassadors and keep the business running. In fact, customers are … Read more
Terms like revenue, billing, collections, bookings are often used interchangeably and although interrelated, they mean different things in the world of SaaS. Booking, revenues and billings are among the three most commonly used metrics that’s why we have dedicated a separate post for these three. For the sake of explaining, let’s consider … Read more
We recently discussed how revenue should be recognized in a SaaS company, comparing it to bookings and billings, and it’s pretty straight forward. Profit is harder to define. There are multiple ways to keep track of it, with metrics such as Operating Income, Net Income, Free Cash Flow, Cash Flow or something … Read more
What comes to your mind when you read the letters ARR? Well, if you’re in the financial market you may refer to the NYSE:ARR stock, if you’re a tech guy you may think of Application Request Routing; but for us SaaS professionals, ARR means two things only: Annual Run Rate and Annual Recurring … Read more
The famous investor and also founder of Techstars, Brad Feld — recently wrote a post on this blog titled “The Rule of 40% for a Healthy SaaS Business”. A couple of days later, Tomasz Tunguz an also famous venture capitalist at Redpoint Ventures also wrote a post about it, titled “The Data Behind The Rule of 40%”. … Read more