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
Months to Recover CAC What is it? How to calculate it? Months to Recover CAC Months to recover CAC is a measure of time that demonstrates how long do you take to recover the amount of money invested on customer acquisitions (CAC). It tells your break even on a specific customer, group … Read more
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
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
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
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
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