There are four key finance data sources that we need monthly to scale our SaaS business. This data can mean the difference between running financially blind and financial transparency. The data sources that I outline below are core to my financial framework. I follow a sequential process to build data discipline and data integrity. You […]
How to Correctly Calculate your SaaS Gross Profit Margin
There are many financial metrics that I calculate and review each month, and this includes my SaaS gross margin. Of course, it’s not just your overall gross margin that is important. You must also calculate and understand gross margins for each of your revenue streams. Depending on your business model, these revenue streams may include […]
How to Calculate Margins by Revenue Stream
Gross margin analysis is fundamental to assessing the profitability and overall financial health of your SaaS business. First, we must understand our overall gross profit. Overall gross profit is commonly calculated incorrectly. Next, we must understand the health of each revenue stream. Each revenue stream’s gross profit contributes to our overall gross profitability. Margins by […]
How to Effectively Manage Your Professional Services Team with Metrics
Your professional services team plays an important role in your SaaS company. Botch a customer onboarding and you may have just lost valuable ARR. Services means different things to different companies. It could be a one-hour onboarding call or a twelve-month implementation project. Either way, we must understand several key concepts to effectively manage our […]
How to Calculate Gross Dollar Retention
Gross dollar retention measures the amount of revenue that you keep from your existing customer base. Gross dollar retention (GDR) along with net dollar retention (NDR) are critical metrics for SaaS operators and investors. Gross dollar retention is also known as gross revenue retention (GRR). As operators of our SaaS businesses, it’s critical to track, […]
The SaaS Bookings Report | Why it Matters
The path to financial transparency requires a strict, monthly data routine. One of the reports that contributes to this routine is the software bookings report. And it’s one of the biggest data mistakes that I see in SaaS. Without solid bookings data, we cannot track the performance of our sales team, forecast revenue accurately, and […]
Quantifying Investments in Customer Success and Retention
CFO’s like to analyze and quantify as much as possible. Our utopia is data-driven decisions while avoiding analysis paralysis. We are known for saying “no” a lot, but really, we want to enable. So when it comes to the Customer Success function, how do we quantify this investment? Or general investments in retention programs? In […]
How to Calculate Your SaaS R&D Investment Efficiency
We make constant capital tradeoffs in our SaaS business. Even if we have a ton of cash in the bank, we still need to prioritize the investments in our business. Investment in our product roadmap is a constant discussion. Are we fixing technical debt, responding to whimsical feature requests, or investing in features and modules […]
How to Create Your MRR Schedule
MRR, or monthly recurring revenue, is the life of a SaaS business. It’s essential data to manage and improve your business. And the MRR schedule is one of the most requested data items in due diligence. The SaaS MRR schedule, or sometimes called the MRR waterfall, is the source of key SaaS metrics. It’s also […]
The ROSE Metric | The Return on Your Most Important SaaS Asset
There are a ton of SaaS metrics measuring sales efficiency, margins, revenue, and more. These are all important metrics (depending on the stage of your business) that you should be constantly monitoring in your SaaS organization. But I have a gut feeling that we are missing an important metric around organizational efficiency. Something that will […]