SaaStr

AUGUST 8, 2023

The Strategic Finance Team Responsibilities Strategic Projects Capital Raising, M&A Cost Optimization Resource Allocation The strategic finance team works on special projects that either increase revenue or decrease costs. Cost Optimization Identify and implement strategies to improve margins. So, Miao and the team got to work.

Scale 166

Scale Finance Outsourcing Services Sales Recruiting 166

The Angel VC

SEPTEMBER 10, 2019

Done wrong, freemium can end up cannibalizing your paid user base while also draining your company’s precious engineering and customer support resources. But there are a number of factors you should consider first: Added costs: Given that SaaS is an extremely high-gross-margin business, one might think that you can easily support free users.

Scale 172

Scale Engineering Enterprise SaaS 172

Kellblog

NOVEMBER 23, 2022

Gross dollar retention = current ARR from year-ago cohort excluding expansion / year-ago ARR from year-ago cohort. These organizations can explode so I’m always watching ARR/CSM and looking out for stealth CSM-like resources (e.g., ARR/employee = ending ARR/ending employees, a gross overall measure of employee productivity.

Technical Review 118

Technical Review Software Review Forecasting Churn 118

User Pilot

MARCH 12, 2024

Examples of company activity metrics include customer satisfaction score, revenue, and profit margin. Customer acquisition cost The Customer Acquisition Cost (CAC) refers to the costs and resources required to acquire a new customer. How to calculate the net profit margin. Book a demo to learn more. Customer lifetime value.

Metrics 103

Metrics Scale Customer Lifetime Value Business 103

Baremetrics

SEPTEMBER 9, 2021

Understanding revenue for your SaaS business Understanding profit: what does your profit margin tell you about your business? Understanding profit: what does your profit margin tell you about your business? The profit margin is the percentage of profit made by a company from its sales. There are four different types of margins.

Payments 103

Payments Revenue Payment Services SaaS Payments 103

User Pilot

OCTOBER 5, 2023

This enables you to allocate your resources to the channel with the best ROI. The CAC payback period formula is pretty straightforward: CAC Payback Period = Customer acquisition cost / (Net new MRR acquired * Gross margin) To calculate it, you need: Customer Acquisition Cost (CAC) – combined sales and marketing expenses.

SaaS Payments 103

SaaS Payments Customer Lifetime Value Payment Solutions Acquisition 103

Intercom, Inc.

OCTOBER 7, 2020

Assuming you’re using third parties like Amazon Web Services and reserving instances along the way, the more seats you sell, the lower the marginal costs to host each additional seat. As hosting costs per seat decrease, you can increase your support spend per seat while maintaining the same gross profit margin.

Customer Support 196

Customer Support Investment Scale Retention 196

Tom Tunguz

DECEMBER 7, 2015

The company serves the mid-market and enterprise customers with a broad software suite that includes Payroll, Human Resources Management Software (HRIS), Benefits Management, Time Clock and a Self Service Portal for employees. The median publicly traded SaaS company operates with 71% gross margins.

Software 100

Software Marketing Forecasting Enterprise 100

SaaStr

JANUARY 12, 2023

As inflation rises, resources must be used more strategically since it’s become difficult to estimate to cost of capital. However, with rising inflation and interest rates, investor focus pivoted to margin. . Companies that achieved The Rule of 40 through margin lost less value overall. Product efficiency.

Consulting 40

Consulting Underperforming Technical Team Management Marketing 40

ChurnZero

JUNE 9, 2023

Gross revenue retention (GRR) GRR illustrates a company’s ability to retain customers. Discounts chip away at profit margins, so it’s important to try to understand the root cause and look for trends. This is very useful for planning CS resource allocation. These insights will inform resource adjustments to reduce churn.

Finance 98

Finance Metrics Customer Success Headcount 98

Tom Tunguz

MAY 18, 2015

Both companies eventually offered talent acquisition, performance management, and learning tools for human resources teams. SuccessFactors also generated slightly lower gross margins compared with Taleo. Professional services depress gross margins because they are often sold at cost or at negative gross margin.

Sales Recruiting 100

Sales Recruiting Scale Software Acquisition 100

Tom Tunguz

JUNE 8, 2015

Based in San Diego, ServiceNow employs roughly 3000 people, and sells a system of record for IT operations teams to manage IT assets, facilities, and human resources. Gross margins hover in the 60s which is about 10 percentage points lower than the median.

Benchmarks 113

Benchmarks Metrics SaaS Investment 113

Tom Tunguz

JULY 29, 2015

Netsuite began developing ERP (enterprise resource planning) tools to help companies manage their finances, expenses and supply chain. Netsuite operates its professional services division at 0% gross margin - basically at cost - which is in the middle of the pack.

Benchmarks 102

Benchmarks Outsourced Development Metrics Scale 102

OPEXEngine

JULY 26, 2022

Top performers had high Magic Numbers, high growth rates, and less negative EBITDA margins, resulting in better Rule of 40 results. Valuations are still pegged to top-level growth metrics, balanced by operating profitability. The opposite was true for the bottom quartile for current market cap to revenue multiples.

Marketing 52

Marketing SaaS Benchmarks Metrics 52

User Pilot

JULY 22, 2023

Tracking them allows you to allocate resources effectively and optimize your sales and marketing budget. Some other key product metrics are customer retention rate, customer churn , average revenue per user, conversion rate , and gross margin. But how do they differ from each other? How to calculate LTV to CAC ratio?

Acquisition 81

Acquisition Customer Lifetime Value Onboarding Retention 81

Stax

FEBRUARY 21, 2024

The Magic Number is one of many SaaS metrics, such as customer lifetime value (LTV), churn rate, profit and gross margin, annual recurring revenue (ARR), and monthly recurring revenue (MRR), you should be using to evaluate sales and marketing performance. This is where the SaaS Magic Number becomes particularly handy.

SaaS Payments 88

SaaS Payments Payments Payment Services Stax 88

Point Nine Land

SEPTEMBER 9, 2019

Done wrong, freemium can end up cannibalizing your paid user base while also draining your company’s precious engineering and customer support resources. But there are a number of factors you should consider first: Added costs: Given that SaaS is an extremely high-gross-margin business, one might think that you can easily support free users.

Scale 75

Scale Engineering SaaS Enterprise 75

OPEXEngine

FEBRUARY 25, 2020

Done wrong, freemium can end up cannibalizing your paid user base while also draining your company’s precious engineering and customer support resources. But there are a number of factors you should consider first: Added costs: Given that SaaS is an extremely high-gross-margin business, one might think that you can easily support free users.

Engineering 59

Engineering Enterprise SaaS Customer Support 59

Point Nine Land

JUNE 18, 2023

For example, you might find it acceptable to pay up to 15 months of (Gross Margin adjusted) MRR for a new customer. The simplest formula to calculate customer lifetime value for a SaaS company is to take your ARPA (adjusted for CoGS, i.e. your average Gross Profit per account) and divide it by your customer churn rate.

SaaS Payments 128

SaaS Payments Payment Services Payments SaaS 128

SaaStr

APRIL 30, 2022

Quickly on gross margin. Gross margin isn’t really something we look at that much in SaaS businesses because it’s basically your MRR minus your cost of goods sold. We’re looking at pure margin here. That’s one of the rarest resources you guys have. Your developers are busy.

SaaS Payments 228

SaaS Payments Metrics Payment Methods Scale 228

ChurnZero

JUNE 15, 2021

Three of the most talked-about metrics are logo retention (also called customer churn), gross revenue retention (also called gross dollar retention), and net revenue retention (or net dollar retention). For more details about these distinctions and other key metrics, check out this resource from ChurnZero.

Retention 59

Retention Metrics Churn Customer Success 59

User Pilot

DECEMBER 3, 2021

These include the LTV:CAC ratio, churn, and gross margins. The reason it can’t calculate gross margins is because it doesn’t account for the cost of goods sold or COGS. While the magic number is undoubtedly an invaluable sales and marketing metric to monitor, there are still things it can’t tell us.

Metrics 103

Metrics SaaS Scale Churn 103

OpenView Labs

NOVEMBER 16, 2021

Because the nature of SaaS is that it takes significant working capital and initial resources to come up with a good product, and the repayment on that investment occurs over a long period of time. COGS appears on a company’s income statement and can be subtracted from revenue to calculate a company’s gross profit.

Benchmarks 71

Benchmarks Metrics Scale Sales Recruiting 71

Baremetrics

NOVEMBER 25, 2021

Define your hiring resources 5. Align hiring practices and resources with needs Frequently asked questions about hiring plans -> Who builds the hiring plan? Define your hiring resources. Align hiring practices and resources with needs. How do you create a hiring plan that stands up financially? Assess your team 3.

Sales Hiring 97

Sales Hiring Sales Recruiting Finance Forecasting 97

User Pilot

JULY 27, 2023

Chief Technical Officer : Responsible for outlining the company’s technological vision, implementing technology strategies, and ensuring that the technological resources are aligned with the company’s business needs. Net profit margin: This metric shows how much of your revenue translates to profit.

Sales Hiring 98

Sales Hiring SaaS Payments Sales Recruiting CTO Hire 98

OPEXEngine

FEBRUARY 22, 2022

Customers of these SaaS companies also referred to as “Small and Medium Businesses” or SMBs, need the same software solutions as Enterprise companies but have resource constraints that prevent them from using the top SaaS vendors. The most common resource constraints are staffing and budget.

SaaS Payments 52

SaaS Payments Payment Services Payment Methods Marketplace as a Service 52

CustomerSuccessBox

SEPTEMBER 2, 2021

Calculate the CAC (including sales and marketing expenses), then determine lifetime value (LTV) while taking into consideration gross margin. CAC= (Cost of Sales + Cost of Marketing) / New Customers Acquired LTV= (Average monthly payment* gross margin%) / Churn Rate Ratio= CAC/LTV. of Implementing Customer Success.

Acquisition 52

Acquisition Payments Scale SaaS Payments 52

ProfitWell

MARCH 6, 2020

Instead of spending resources on penetrating a new market and taking the risk of penetration pricing, revenue enhancement will help you refocus your efforts on existing customers. You should first examine your operating margin and gross profit margin (which should honestly be habitual). Focus on high-margin customers.

Payments 52

Payments Revenue Subscription Payment Features 52

ProfitWell

MARCH 6, 2020

Instead of spending resources on penetrating a new market and taking the risk of penetration pricing, revenue enhancement will help you refocus your efforts on existing customers. You should first examine your operating margin and gross profit margin (which should honestly be habitual). Focus on high-margin customers.

Payments 52

Payments Revenue Subscription Payment Features 52

OpenView Labs

JANUARY 3, 2022

Grow: Setting a low price, leaving most of the value in the hands of your customers, shutting off margin from your competitors. At this point, a shift back to skimming or Premium pricing can have a big impact on gross margin. Additional Resources from Steven Forth. What Are The 3 Pricing Strategies?

Pricing 67

Pricing Strategy Innovation B2B 67

OpenView Labs

FEBRUARY 3, 2022

This metric represents how long it takes, in months, to pay off the costs of acquiring a given customer on a gross margin basis. Then, and only then, you’re ready to invest more resources to truly become a market leader. As investors, we keep a close eye on customer acquisition cost (CAC) payback.

Headcount 73

Headcount SaaS Compensation Acquisition 73

OpenView Labs

JUNE 25, 2019

We recommend adopting the following formula that will provide you with the most accurate view of payback: CAC Payback = Sales & Marketing Expenses in Period / (Net New MRR Acquired in Period * Gross Margin). Invest some time and resources into ensuring that users encounter as little friction as possible on their way to buying.

Scale 40

Scale Development Team Review Software Review Benchmarks 40

ChurnZero

DECEMBER 2, 2021

If a churn-and-burn deal is important enough that it creates stress among that triumvirate, you’re going to see gradually improvement and you’re going to get more resources. Or perhaps you’re at a juncture where leveraging a partner is more margin accretive, thus is margin dilutive, and therefore a case for increased efficiency.”.

Customer Success 98

Customer Success Technical Review Scale Compensation 98

ProfitWell

JUNE 15, 2020

Data management platforms (DMPs) are gaining traction for data unification purposes in retail, meaning there are now more resources available to provide a unifying view of customers’ needs. I found a resource that may help: The Quick Guide to Inventory Management for Ecommerce. Product Margin. Communicate clearly and often.

Payment Methods 76

Payment Methods Merchant Services Payments Customer Lifetime Value 76

ChurnZero

OCTOBER 28, 2022

While it was said that CS was really important, all of the decisions and the priorities and the resources were really focused on the sales front. How do I take the resources that I have and make the best use of them? Do those activities in the way that scales the best. Sales, marketing, product, engineering.

VP of Engineering 52

VP of Engineering Customer Success Scale Underperforming Technical Team 52

yoursales

NOVEMBER 18, 2022

Typically, it’s really a resources question: Can we do with the people and language capabilities we have on board right now? It’s the largest country in Europe in terms of population as well as by Gross Domestic Product. When the competition is strong, sometimes it’s the margins that win it. So, how bad do you want the Nordics?

B2B 90

B2B Sales Hiring SaaS Sales 90

OPEXEngine

OCTOBER 25, 2019

The Cloud infrastructure landscape for all SaaS companies should become more competitive, contributing to better margins and continued growth. Cost of revenue is trending down for SaaS companies, leading to higher gross margins. Cloud companies are getting better and better at managing resources for growth.

Trends 40

Trends Marketing SaaS Azure 40