If you’re like many growing SaaS businesses, chances are you’re tuning into data to help drive business decisions. There are so many data points available now, and getting the most out of all that information can feel daunting.
About 50% of businesses say the use of analytics has directly inspired better performance. Another 64% say it improves their efficiency and productivity.
In the world of SaaS, there are a handful of specific metrics businesses return to again and again to gauge and forecast growth, assess risk, and determine the overall health of their companies. And while each of these metrics can be determined with a formula, there are some great calculators out there that really help to expedite the process and ensure data accuracy.
We did some digging and put together a list of top SaaS metrics calculators so you can pull the numbers you need when you need them in just a few simple steps.
1. Customer acquisition cost (CaC) calculator
Calculator: CaC Calculator
Description of CaC: The total cost to convince a customer to purchase a product or service, or simply, the cost of converting a potential lead into a customer.
Determining your average cost of acquisition (CaC) is critical to understanding the effectiveness of your business model.
The basic formula to determine this is pretty straight forward: it’s your total marketing expenses plus your total sales expenses divided by your number of new customers acquired.
However, there are some important numbers that should be factored into this calculation—but sometimes aren’t—including your sales and marketing teams salaries, the costs of the tools they use, and your overhead, such as rent and equipment.
There’s also the length of your sales cycle to factor in, as well as the possible costs of supporting potential customers through trial periods.
A metric that initially seems simple can actually get quite complex. But it’s important to take the time to get it right. Ex-VP growth at Hubspot Brian Balfour breaks it down here, and even provides an interactive spreadsheet to help you out.
Understanding your acquisition costs comes with many opportunities, such as the following.
- Explore new marketing techniques: Your CaC report may inspire creativity in how you approach your marketing. For example, inbound marketing can be a highly effective, lower-cost way to attract customers.
About 51% of shoppers say they depend solely on Google to connect with products. This suggests that devoting more to your SEO strategy could be profitable. Your team should also be reviewing the effectiveness of its search engine advertising and optimize around the ads that bring the most customers in for the least spend.
- Review your business methodology: Is your SaaS business leveraging product led growth (PLG) to get paying customers signed up and growing with your business? How well are you doing it?
According to survey results from Openview, 4 in 5 SaaS companies say they’re using at least one PLG tactic, but only 27% say it’s fundamental to their business. Using PLG can be a good way to reduce your CaC.
- Take another look at your product: When customer acquisition costs are high, it can serve as motivation to consider the performance of your product relative to what is already on the market.
Making product tweaks could lower your CaC and set you up for future success. Studies show customers are willing to pay up to 18% more on products they view as premium, suggesting that high-value feature upgrades can result in a significant ROI.
2. Customer lifetime value (LTV) calculator
Calculator: LTV Calculator
Description LTV: The projected total value you can expect from a customer during the entirety of your business relationship.
Understanding your LTV can make marketing and sales decisions more straightforward. It’s easier to understand how much money to put towards acquisitions or even how much of a discount you can offer new clients if you know in advance what kind of a return on your investment you’re likely to receive.
Understanding your LTV—as well as your current customers that have the highest LTV—can:
- help you finetune your marketing efforts and aid in the pursuance and acquisition of customers that provide a higher ROI, and
- assist you in managing existing accounts to increase profitability while giving the customer a better experience. If you know when customers tend to churn out then you can better manage your customer success strategy.
Knowing your LTV can also help inspire a little bit of creativity on the sales front. For example, it’s easier to extend multi-year discounts and bespoke packages if you have very clear expectations for the ultimate ROI you’ll receive throughout the contract.
Important though LTV is, it’s also underutilized. About 64% of businesses self-report they’re not doing a very good job measuring their LTV. Make sure your business is on the right side of those statistics.
3. Monthly recurring revenue (MRR) calculator
Calculator: MRR Calculator
Description of MRR: The amount of predictable revenue a business can expect to earn on a monthly basis.
One of the biggest benefits of a monthly recurring revenue model is predictability. Using this model, you can have a reasonable idea of the average amount of money you’ll bring in monthly. Almost all SaaS businesses rely on MRR to some extent.
For a very basic look at your MRR:
- multiply your number of customers by the amount of money your service costs each month. If you have 100 customers all paying $100 a month, your MRR is $10,000.
To get a more accurate estimate:
- you also need to factor in your average customer gains and your churn rate. For example, if you have 100 customers all paying $100 but each month you bring in five new customers, and lose one, you can estimate an MRR of $10,400 for next month.
You can complicate the arithmetic even further by controlling for how much you spend on acquiring each customer. The more precise you want to be, the more complicated the formula becomes.
But a deep understanding of your MRR can help with future forecasting. It can also enhance the way you understand your cash flow and inform the way you invest in your business.
4. Customer churn calculator
Calculator: Churn Rate Calculator
Description of Churn: Churn is a measure of attrition or loss. It can relate to lost customers, but can also refer to a rate of lost or reduced MRR, contracts, contract value, and more.
Customer churn has a huge impact on your MRR. While some turnover is natural, a high customer churn rate probably indicates there’s something your business can be doing better.
The ways to calculate churn can differ across organizations. And these formulas to calculate churn, as well as the various types of subscriber churn metrics, can get complicated. Apparently, there are more than 40 ways different public SaaS companies account for this metric.
This complexity only emphasizes the fact that understanding your customer churn and retention analytics can help you catch problems early, improve the accuracy of your financial forecasting, and get a better overall understanding of how your business is performing.
5. Annual Recurring Revenue (ARR) Calculator
Calculator: ARR Calculator
Description of ARR: The amount of predictable revenue a business can expect to earn on a yearly basis.
ARR enables you to understand how your subscription SaaS business is doing on a more macro level, as opposed to MRR’s more frequent monthly measurement. It’s relevant to businesses with annual plans, or with monthly-paying customers that make at least a year-long commitment.
When choosing between MRR and ARR, it’s about which best suits your business model.
While both metrics help you gauge the health of your SaaS business, ARR enables you to monitor your year-over-year progress, or how your revenue stacks up over time. It also provides an important baseline to help you predict longer-term future growth, and to make important decisions about the direction of your business.
And being able to show significant ARR growth predictions can help scaling SaaS businesses attract investors.
The value of SaaS metrics and SaaS calculators
The value of financial data can’t be underestimated if you’re a growing SaaS business. SaaS metrics—including the key metrics discussed above—provide a strong source of business intelligence and indicate the overall health of your company.
Solid data also serves as a source of insight into the future of your business. This enables you to make confident decisions to guide your growth in the right direction. Because it’s one thing to have the data, and it’s a whole other thing to act on it.