Two Key SaaS Metrics that Predict Your Company’s Potential Size I remember as a kid when doctors would try to predict your full-grown height based on a few measurements. Well, what if I told you I can do the same thing for your SaaS company but with more accuracy? Give me three numbers, and I […]
The SaaS P&L Explained – Where Metrics and Margins are Born
You can’t manage a SaaS business by only using the standard financial statements. To really understand the underlying economics of your business, you must have a properly structured “software” or SaaS P&L (Profit and Loss Statement). You must also calculate the relevant SaaS metrics and margins for your business. The SaaS P&L Explained “infographic” below […]
How to Forecast Your Sales Team Headcount While Scaling Bookings
Sales Team Headcount Forecast If you have a detailed forecast model, extending the forecast time frame by adding more columns is very easy. The hard part is scaling your expense base so that you don’t have unbelievable margin and net income expansion. One area of the P&L that I struggle with is the sales team […]
How I Calculate the CAC Payback Period
CAC Payback Period is a top operator and investor metric. It’s part of my Five Pillar SaaS Metrics Framework. It’s core to GTM efficiency calculations. There are many flavors of CAC Payback Period now. I’ll cover the traditional metric that you must master in your SaaS business. However, you should consider the Dollar-based CAC Payback […]
What the SaaS Magic Number of One is Not Telling You
Why the SaaS Magic Number of One is So Lonely The SaaS Magic Number is a sales-related SaaS metric that determines your efficiency in generating incremental recurring revenue. In the SaaS community, a SaaS Magic Number of 1 or greater is considered ideal, but should you really pour more money into sales and marketing if […]
The Forgotten Sales Efficiency Metric
Sales Efficiency Metrics – Cents on the Dollar Recently, I was reading a Tom Tunguz article on how to compensate sales teams. In his article, he cites sales efficiency metrics and customer acquisition costs on a dollar basis from the recent Pacific Crest Securities SaaS survey. It is an interesting way to look at CAC. […]
So you want to jump on the subscription pricing bandwagon?
Switching From One-time Sales to Subscription Pricing Subscription pricing has become an extremely popular revenue model these days. It seems like any product or service such as wine, tea, cosmetics, or HVAC maintenance can be purchased via a subscription. One-time sales seem to be a thing of the past. You can’t blame businesses for jumping […]
Income Property Valuation Model | A Step-by-Step Guide
Inspired by a podcast on the Tropical MBA on property investment, I thought that I would dust off my Income Property Valuation Model that I created about ten years ago when daydreaming about investing in rental or income properties. I usually post about SaaS economics and forecasting, but it is good to change the subject […]
SaaS Revenue Waterfall Chart
SaaS Revenue Waterfall Chart Ugh, Budget Season! For most of us, we are beginning budget season or we are in the midst of budget season spending crazy hours manipulating numbers, building models, and meeting with department heads to create a workable first draft of the budget. I won’t dive into the pro’s and con’s of […]
Capital Expenditure Forecast Model
Easy Forecast for Capital Expenditures When I was working in airline industry, capital budgeting was a large part of the of budgeting and forecasting process. Makes sense. Lots of airplanes and equipment at the airports. You didn’t want to get your depreciation forecast wrong and mess up the cash flow forecast. Big problems. You spent […]