SaaS Metrics are more powerful when used together. In isolation, they offer less context.

Assess your CAC Profile to grasp the full picture of GTM efficiency.

🧵 Here’s a quick summary to help you analyze your CAC profile and grow. 📈 #saas
You will need the following inputs for CAC profile calculations:

1️⃣Sales expenses - wages, taxes, benefits, travel, commissions, CRM, training, etc.
2️⃣Marketing - marketing, paid ads, conferences, brand, swag, ESP, etc.
3️⃣Bookings - dollars and logo counts Image
4️⃣MRR/ARR - includes new, expansion, and maybe contraction

5️⃣Logo count - the number of new customers/users each month

6️⃣Gross Margin - recurring gross margin and maybe variable gross margin
How to Assess Your CAC Performance?

To analyze your #SaaS CAC performance, use the following metrics:

✳️CAC: calculate CAC on a unit basis by dividing it by new customers acquired

✳️CAC Payback Period: after CAC, calculate the numbers required to pay back the upfront CAC Image
✳️Cost of ARR (aka CAC Ratio): compare your sales and marketing expense against the new ARR or MRR that we are acquiring

✳️LTV to CAC: the customer lifetime value needs to be at least 3x your CAC. New data says 4x.
✳️SaaS magic number: compare your annualized revenue growth to your previous quarter’s sales and marketing expense

✳️Monthly metrics Dashboard: produce a monthly metrics dashboard like in the snippet below and compare against industry benchmarks Image
Want to explore CAC metrics or download my templates, check out my full article:
thesaascfo.com/how-to-assess-…
Need training on SaaS metrics? My April metrics course is open for enrollment! Learn more here: thesaasacademy.com/saas-metrics-f…

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Ben | The SaaS CFO

Ben | The SaaS CFO Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @TheSaaSCFO

Mar 1
2023 is about time to value!

Watch this short demo on how you can create and publish your first #SaaS metrics dashboard in 2 minutes.

Follow the thread to see this live dashboard in your browser and how to create your dashboard account.
See the live dashboard here. It's very easy to share with your team, Board, and investors without adding them as users. app.backofficetools.com/metricsdashboa…
To create an account and your first dashboard, register for this short video tutorial here. thesaasacademy.com/offers/FGT86tv…
Read 4 tweets
Feb 3
How important are clear and distinct revenue streams in SaaS? Well, your valuation depends on it.

The proper SaaS P&L setup helps your team, your Board, and your investors.

Quick guide. #saas
SaaS Revenue Streams

It's no longer just subscription revenue for SaaS companies. That was SaaS pricing 1.0.

I've worked with SaaS companies that had 5 distinct revenue streams.

Have you clearly defined your revenue categories? Image
Subscription Revenue

🚀Generated from invoicing subscription contracts that range from monthly to multi-year. Your product and resold products. This is contracted MRR or ARR.

☠️Careful with resold products. I may roll up to subscriptions but I code to a different GL account
Read 10 tweets
Jan 31
Time for Advanced SaaS COGS. COGS vs OpEx is so important to get right.

But what if we have multiple revenue streams? Our COGS section must align with this.

Quick guide. #saas
What departments are included in pure-play SaaS COGS?

For pure-play SaaS, your COGS structure should include:

1⃣Technical Support
2⃣Professional Services
3⃣Customer Success
4⃣Dev Ops

Of course, CS is up for debate depending on their role.

Dev Ops = Cost of Ops in my example
What if we have more than just subscriptions and services?

It's very common in SaaS to have subscriptions, services, and variable revenue streams.

I had one client with all but managed services in the pic below.
Read 7 tweets
Jan 30
SaaS COGS vs. OpEx is a common discussion in my courses and with my clients.

What should I include in SaaS cost of goods sold (COGS)?

Quick guide below and why this is important. #saas
What departments are included in SaaS COGS?

For pure-play SaaS, your COGS structure should include:

1⃣Technical Support
2⃣Professional Services
3⃣Customer Success
4⃣Dev Ops

Of course, CS is up for debate depending on their role.

Dev Ops = Cost of Ops in my examples Image
📌Technical Support

They manage inbound customer contact regarding product bugs and how-to's.

💡Typical Expenses: Wages, payroll taxes, benefits, travel, training, internal software subscriptions
💡Margin: Included in recurring gross margin
Read 8 tweets
Jan 10
CFO’s will tell you that financial discipline never goes out of style. Good markets, bad markets. Doesn’t matter.

But with the tighter markets, everyone is calling for longer cash runways and attention to the Rule of 40 metric.

A quick post on the Rule of 40. #saas
What is the Rule of 40?

It's a financial framework that measures revenue growth vs profit margins. The Rule of 40 determines the health and/or attractiveness of your business. To CFO’s, it adds financial discipline to your decision-making process.
How to Calculate the Rule of 40

Rule of 40 = growth % + profit margin
If revenue growth is 15%
and profit margin is 20%
Your rule of 40 number is 35%
Can you have negative inputs? Yes, that’s the meaning of the Rule of 40.

Increase growth or profit to reach 40% or higher.
Read 9 tweets
Oct 28, 2022
I review a lot of SaaS P&L's. 90% are structured incorrectly or need improvement.

Quick thread on the 4 common mistakes in your SaaS P&L setup. With pictures :) #saas Image
The SaaS P&L Structure

A properly formatted SaaS P&L tells you so much! And it's easily consumable by operators and investors.

- gross profit
- margins by revenue stream
- OpEx profile
- EBITDA
- and it easily feeds S&M efficiency metrics

Cost of Ops = Dev Ops in this example Image
The Chart of Accounts

The COA is a numerical and descriptive listing of all the accounts on your general ledger from the balance sheet to the income statement.

This is "under the hood" of your P&L. You need enough rev and expense detail for proper coding, analysis, rollups. Image
Read 6 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

:(