Crazy about metrics, at least 97.34% of the time
When we think about SaaS revenue, when do we consider it as revenue? Is it when we have issued the invoice? But we have not done anything yet. Revenue recognition tell us how to handle the different revenue types.
The first rule or SaaS pricing strategy is you should actually have a price. Why? because pricing is information. The only way to know if people will buy your product in the future is if you can successful charge for it today.
Monthly Recurring Revenue (MRR) is the most important metric for SaaS business. Since it is recurring it indicates the stability of the business.
The aim of a business is to grow and the way to do you need to gain more customers. The easiest way to do this is to use money to promote your product, but not all growth is good growth, especially where the Customer Acquisition Cost (CAC) is more than the revenue from the new customer.
Computers have got cheaper since the early days and the internet has caused software to evolve into Software as a Service (SaaS) in the early 2000's
Not all customers are equal and the best customer have a high customer lifetime value (LTV). Being able to calculate your LTV helps you to ensure your business model is sustainable.
The customer is king, but how do you know when you have a customer? It is when they sign up? When they start a trial? or when they start using the product? what about freemium users? Are user the same as customers?
In the SaaS world the most feared word is "Churn". It sounds innocuous enough but it represents rejection and defeat. The question is why did your customer churn and how can you stop it?
SaaS provides a huge range of applications at a low cost but it needs to ensure that the customer does not churn before the on-boarding costs are recouped.
