A New Way to Calculate a SaaS Company’s Efficiency


tomtunguz.com – There are many ways of measuring a SaaS company’s efficiency: magic number, payback period on cost of customer acquisition, lifetime value to cost customer acquisition ratio, quick ratio. One way of measuring this is by calculating the company’s cost per recurring gross profit dollar (CRGPD).

The CRGPD measures the company’s efficiency in acquiring and sustaining a gross profit annuity stream. Unlike CAC Payback Period or LTV/CAC which are unit metrics that measure efficiency on a per customer basis, CRGM measures efficiency on a per dollar basis. It’s akin to the difference between churn on a customer basis and churn on a dollar basis.

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photo CC by jar [o]


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