Common Ways of Miscalculating and Misinterpreting SaaS unit Economics

Common Ways of Miscalculating and Misinterpreting SaaS unit Economics

When it comes to measuring subscription businesses, unit economics is crucial. Miscalculating or misinterpreting these numbers can be really harmful to your business. This set of metrics will tell you if you’re building a sustainable business, and that is only possible with profits. One can say that making no profits is not necessarily bad, … Read more

Benchmark for B2B SaaS sales cycles

Benchmark for B2B SaaS sales cycles

When it comes to B2B SaaS sales cycles, it’s never easy to know if you’re doing good. How many days does it take to close a deal? What factors and characteristics affect this number? The first thing to understand is that SaaS sales cycle can vary dramatically, depending on a few factors. … Read more

The Right SaaS Metrics for Each Stage of Your Company

The Right SaaS Metrics for Each Stage of Your Company

You probably know tons of different SaaS and subscription metrics, and you probably heard you should be measuring a few of them no matter what. Actually even we have told you that on the “5 metrics that every subscription business should be measuring” article. Guess what? That isn’t necessarily true. Don’t get … Read more

Effective Tactics to Reduce SaaS Churn

Effective tactics to reduce SaaS churn

If you’re just getting started to acquire your very first customers, churn may not be a big deal, but as soon as you get over a hundred customers to churn becomes crucial. And by crucial, I mean it can be the difference between the success and failure of your business. A high churn … Read more

Bookings vs Revenues vs Billings

Bookings vs Revenues vs Billings

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

EBITDA vs Gross Margin vs Net Profit

EBITDA vs Gross Margin vs Net Profit

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

ARR vs ACV vs TCV

ARR vs ACV vs TCV

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

What Is Customer Engagement Score and How to Calculate It

What is Customer Engagement Score and How to Calculate It

At its core, customer engagement score is a single metric that is used to measure how engaged your customers are. The metric is represented by a number based on customer activity and usage of your product or service — the higher the number the happier and more engaged the customer. Together with customer … Read more

The Rule of 40 for SaaS and Subscription Business

The Rule of 40 for SaaS and Subscription Business

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

Customer Churn vs Revenue Churn, Understand the Difference

Customer Churn vs Revenue Churn, Understand the Difference

Churn is the enemy of any subscription company. In a general definition, churn is the number or percentage of subscribers to a service that discontinues their subscription to that service in a given time period. In order for a company to expand its clients base, its growth rate must exceed its churn … Read more