# Saasy math

## A collection of simple, easy to use SaaS metrics with formulas, sample calculations, and examples of how to find this data in your own tech stack

Net Revenue Retention (NRR)
Net Revenue Retention represents how well you are retaining and expanding your existing recurring revenue. NRR is most typically measured either annually or month-to-month, but you are always comparing a cohort (a group of customers acquired at the same time) to see how their subscription revenue fares over the given time period. Think about your Netflix subscription, when you first signed up, are you still subscribed? And are you paying the same about as before?

Quick and SaaSy Way To Calculate: Go into your billing/subscription management system such as Stripe or Zuora. Go back twelve months and find all of the customers you acquired in that month, total their MRR and save their Subscription ID (Look for all subscriptions with a created date in that month). Then, go to the most recent full month of billing data and pull all of the invoices the match the Subscription ID for all the new customers 12 months ago (the subscription ID lives on the invoice object and you can join the data using these IDs to only get the invoices tied to those subscriptions). Once you have them all you can calculate the total MRR in the most recent month, then just divide that number by previous years MRR number and you have your annual net revenue retention. If you want to take this analysis to the next level shoot me an email and we can discuss how to segment and find how Net Revenue Retention can differ throughout your customer base.

Related Blog Posts: Net Revenue Retention
Gross Revenue Retention (GRR)
Gross Revenue Retention represents how well you are retaining your revenue and DOES NOT include how well you are expanding them. Similar to NRR, GRR measures customer cohorts aver a given time period to see how much of the initial MRR still remains over the given time period.

Quick and SaaSy Way To Calculate: Similar to NRR, go into your billing/subscription management system such as Stripe or Zuora. Go back twelve months and find all of the customers you acquired in that month, total their MRR and save their Subscription ID (Look for all subscriptions with a created date in that month). Then, go to the most recent full month of billing data and pull all of the invoices the match the Subscription ID for all the new customers 12 months ago (the subscription ID lives on the invoice object and you can join the data using these IDs to only get the invoices tied to those subscriptions). Once you have them all you can calculate the total MRR in the most recent month but in the case of GRR, any customers who’s revenue expanded, you need to take out the additional revenue and just keep their original MRR. Then just divide that number by previous years MRR number and you have your annual gross revenue retention. If you want to take this analysis to the next level shoot me an email and we can discuss how to segment and find how Gross Revenue Retention can differ throughout your customer base.

Related Blog Posts: Net vs Gross Revenue Retention
Customer Churn
Customer Churn is the measure of how many customers cancel over time from a given cohort. While the goal is to always minimize churn as best possible, SaaS/Subscription will have some churn and tracking it is crucial for success. Similar to Revenue Retention

Quick and SaaSy Way To Calculate: Go into your billing/subscription management system such as Stripe or Zuora, or go into your CRM such as Salesforce or HubSpot. From either system you want to look for the Customer/Account table from the systems API. From that table you want to look up and count all of the unique customer ID’s that where created in a given month. Then month-to-month you want to run a check on those same ID’s to see how many of them are still active customers and then divide that number by the initial number in their first month. Typically, startups will look at churn on a monthly and annual basis and we highly recommend you track the changes in churn over time (ie. If the rate of churn is decreasing or increasing over time). If you want to take this analysis to the next level shoot me us email and we can discuss how to segment and find how customer churn can differ throughout your customer base.

Related Blog Posts: Churn Isn’t Always Bad, Revenue Churn vs Customer Churn
Customer Acquisition Cost (CAC)
Customer Acquisition Cost, or CAC, is the measure of how much a company must spend in order to acquire a new customer. Typically you look at CAC over a period of time (annually and/or month-to-month) to understand how it is trending for your business.

Quick and SaaSy Way To Calculate: To get your expenses you will need to go into your accounting/financial system such as Quickbooks or Xero, and track down your sales and marketing expenses for a time frame. This will include salaries, tech spend, marketing spend and any other expenses that go into your customer acquisition funnel. You then want to go into your CRM or billing and subscription management system and run a count of all the unique customer ID’s that have a created date in the same time period. You then divide the cost by your new customer count and you have your average CAC. If you want to take this analysis to the next level shoot us an email and we can discuss how to segment and find how customer acquisition cost can differ throughout your customer base.

Related Blog Posts: Don't Get Fooled By CAC
Gross Margin
Gross Margins are the % of revenue left over after you take out the cost of goods (COGS) it takes to make the revenue that is sold. For digital products and services this more commonly is called cost of revenue sold or (CORS). CORS typically encompass the storage and hosting costs incurred to run your product and sore all your users data.

Quick And SaaSy Way To Calculate: Go into you finance/accounting system and isolate the line item for you AWS, Azure or other hosting and storage provider and add up how much you spent on them last month. Then go into your billing/subscription system and calculate your revenue for the same time period and then use those numbers with the above formula and you have your Gross Margin for the last month. It’s good to track your Gross Margins month-to-month to make sure your gross margins don’t start shrinking on you. If you want to take this analysis to the next level shoot us an email and we can discuss how to segment and find how gross margin can differ throughout your customer base.

Related Blog Posts: Why Net AND Gross Revenue Retention Matter
Retention Margin
Retention Margins is a measurement of the % of top-line revenue that is left over each month once you have taken out the cost of revenue (Gross Margins) and the cost of keeping (retaining) your recurring revenue customers. Think of retention margins as the the home profit on a per customer basis after you have retained them month-over-month