Make your investment wise on SaaS
Assess the potential return on investment (ROI) in a SaaS company before making investment decisions.
Calculate SaaS Value in two simple steps:
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How to calculate SaaS Value using a calculator
Some common methodologies like Monthly Recurring Revenue ( MRR ). Churn rate, Customer Acquisition Cost ( CAC ), Customer Lifetime Value ( CLTV ), and gross margin.
Here’s a breakdown of key metrics for a SaaS company:
- Monthly Recurring Revenue (MRR): Revenue that a company generates each month from subscriptions. It’s calculated by multiplying the number of customers by the average monthly subscription fee.
- Customer Churn Rate: The percentage of customers who cancel their subscriptions or stop using the service within a given period (usually monthly). A low churn rate signifies customer satisfaction and a sticky product.
- Customer Acquisition Cost (CAC): The average cost a company incurs to acquire a new customer. It includes marketing expenses, sales commissions, and other costs associated with attracting and converting leads into paying customers.
- Customer Lifetime Value (CLTV): The total revenue a company can expect to generate from a single customer throughout their relationship. It’s often calculated as the average revenue per user (ARPU) multiplied by the gross margin and then divided by the churn rate.
- Gross Margin: The profitability of your core business after accounting for the direct costs of providing your service. It’s calculated as revenue minus the cost of goods sold (COGS), divided by revenue, expressed as a percentage.
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