SaaS Metrics School

By Ben MurrayBusiness Entrepreneurship Technology Management

SaaS Metrics School episodes

July 23, 2023 Should Customer Success Be Coded to COGS or OpEx or Both?
In episode #10, I address a hotly debated topic. Where should your customer success team be coded? And it depends, of course. It can correctly fall in COGS or OpEx or both.
- The case for CS in COGS
- The case for CS in Operating Expenses
- The case for CS in both COGS and OpEx
- What does CS coding matter?
- What are the downline impacts of incorrect coding?
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
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3 min
July 22, 2023 Your SaaS Cost of Goods Sold (COGS) Is Probably Wrong
In episode #9, I address your SaaS cost of goods sold. I review a lot of SaaS P&Ls, and I’d say 90% are set up incorrectly. It’s so important to set up your P&L correctly to manage your business and calculate important SaaS metrics.
- What should be included in COGS?
- Your revenue streams dictate your COGS departments
- Why is COGS important?
- Expectations of COGS
- It starts with your chart of accounts and dimension coding
- Avoid the big bucket of expenses
Blog Post on SaaS COGS: https://www.thesaascfo.com/what-should-be-included-in-saas-cogs/
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
3 min
July 21, 2023 Are You Tracking Your Renewal Rate?
In episode #8, I talk about renewal rates, when it’s applicable, and how it differs from revenue retention. If you invoice annually and/or sell multi-year contracts, you must track your renewal rate. It’s a nice compliment to revenue retention and bolsters that story.
- What is the renewal rate?
- How does it differ from retention?
- It’s a nice compliment to retention
- Track customer and dollar renewal rate
- Where do you get renewal data?
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
4 min
July 20, 2023 Your MRR Schedule Could Cost You Millions in Valuation
In episode #7, I talk about the importance of your MRR schedule and the metrics that result from this schedule. It’s a top due diligence request. Nothing like DD to make you question your numbers.
- What is an MRR schedule?
- How do you create an MRR schedule?
- Tools to create your MRR schedule
- Rev rec can create havoc
- It’s a top due diligence data request
- No retention, no valuation
MRR and Retention templates: https://www.thesaascfo.com/how-to-create-your-mrr-schedule/
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
3 min
July 19, 2023 What’s the Difference Between Forecasting, Planning, and Budgeting?
In episode #6, let’s talk about planning. Or is it budgeting? Wait, no it’s forecasting. Let’s talk about the differences in these terms. Either way, the dreaded budget season is approaching this Fall if you are on the calendar year. Those in FP&A know what I’m talking about!
- The difference between forecasting, budgeting, and planning
- Should I forecast? - How often should I update the forecast?
- Should I do a rolling forecast and skip the budget?
- Do I need to budget?
- At what ARR size do I need a budget?
- Planning encompasses all of this
- Who does the planning for a SaaS company?
- Are there templates for forecasting and budgeting?
- Planning tests the operational knowledge of your leadership team
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
5 min
July 18, 2023 Should I Segment My SaaS Metrics?
In episode #5, I talk a bit about the SaaS metrics journey. Should we calculate metrics in aggregate or by segment? By customer profile or ICP? SaaS metrics can be dangerous to your financial health if you aggregate the wrong data.
- Aggregate or segmented metrics?
- When should we put this in place?
- How I break out SaaS metrics stages by ARR
- What should I consider for segments
- Aggregate metrics can be dangerous
- The trouble with calculating segmented metrics
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
5 min
July 17, 2023 CAC Payback Period | One of My Favorite Metrics
In episode #4, I discuss the meaning of the CAC Payback Period. It’s a top operator and investor metric. Cash must be allocated wisely, and the payback determines how long your capital is tied up in new customer acquisition.
- Top operator and investor metric
- Measures the months to pay back the upfront customer acquisition cost
- CAC payback inputs (cohort ARPA, recurring gross margin, CAC)
- What’s your prize? Logos, users, brands, etc.
- It’s common to gross-margin adjusted payback
- What margin to use
- Segmenting your metrics
Join Ben’s SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout
Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray
Subscribe to Ben’s SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
3 min
July 16, 2023 What Does CAC Mean
In episode #3, I discuss CAC, or Customer Acquisition Cost. CAC can be gross dollars or a unit cost. Screw up your CAC calculation and it affects CAC Payback Period and your Cost of ARR. CAC is fundamental to your metrics reporting package.
Highlights:
- CAC can be dollars or a unit cost
- CAC flows to your CAC Payback and Cost of ARR
- What’s your prize? Logos, users, brands, etc.
- You must allocate gross CAC dollars
- Align CAC measurement to your sales cycle
- Fully burdened sales and marketing dollars
4 min
July 15, 2023 You Need to Allocate Your Sales and Marketing Expenses Between New and Expansion
In episode #2, I break down the new versus existing allocation that is needed for your sales and marketing expenses. If you are going to calculate CAC and other sales efficiency metrics correctly, you must allocate your S&M expenses between new business and expansion business.
Highlights:
- We need gross sales and marketing expenses
- CAC can be gross dollars or a unit costs
- The allocation affects the CAC payback period
- The allocation affects the Cost of ARR – new vs existing
- Early stage not as likely to allocate
- Update this allocation every month
- Disclose to stakeholders in your reporting appendix
- Pitfall: could have the formula correct but your allocation is way off
- This is how metrics can be subjective
4 min
July 15, 2023What is the Cost of ARR
In the first episode, I talk about my favorite SaaS metric, the Cost of ARR (aka SaaS CAC Ratio).
Highlights:
You can calculate blended, new, and expansion
Requires new and expansion bookings data
Need total sales and marketing expense
You must allocate S&M for the Cost of ARR New and the Cost of ARR Expansion
Sales cycle length is important
Easy way to call BS on a bookings forecast with this metric
3 min

About SaaS Metrics School

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Ben Murray brings you actionable SaaS metrics lessons that he has learned through years of being in the SaaS CFO trenches. Whether you are new to SaaS or a SaaS veteran, learn the latest SaaS and AI metrics, finance, and accounting tactics that drive financial transparency and improved decision-making.