A Smart Bear: Startups and Marketing for Geeks

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The unprofitable SaaS business model trap

A Smart Bear: Startups and Marketing for Geeks

So no, this upside-down business model isn’t what a SaaS business should construct. Another way to think about these solutions is that a SaaS business cannot have static fundamental metrics. Leaving the metrics alone, and trying to “grow until profitable” doesn’t work.

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No wait, of course THAT is the single most important SaaS metric

A Smart Bear: Startups and Marketing for Geeks

The single most important SaaS metric is retention , because cancellations indicate lack of product/market fit, no matter the cause (price, features, severity of need, duration of need). If it cannot be fixed, it means the business is a failure even if other metrics are stellar. Once you’re scaling (i.e.

Metrics 270
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SSEBITDA – A steady-state profit metric for SaaS companies

A Smart Bear: Startups and Marketing for Geeks

This is the fourth article in a series on novel ideas for SaaS metrics, which started with The unprofitable SaaS business model trap , COC: a new metric for cancellations , and The mistake of 1/c in LTV. Its tough for a growing SaaS business to ascertain whether or not it’s truly profitable.

Metrics 238
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Darwinian company growth doesn’t always select the best companies

A Smart Bear: Startups and Marketing for Geeks

That last bit should sound familiar if you follow theories of Startup Laws & Metrics. When “growth rate” becomes the only important metric for company “fitness,” other metrics are left unsolved. “Profitability” is perhaps the most-talked-about example of a metric left unsolved.

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Fermi estimation for startup business models

A Smart Bear: Startups and Marketing for Geeks

Often your best estimate of any metric or market behavior or business model component is at best accurate within a power of ten, for example “expected conversion rate between 0.5% Early in a company’s life, you don’t know anything.

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Why I don’t like the LTV metric

A Smart Bear: Startups and Marketing for Geeks

This is the fifth article in a series on novel ideas for SaaS metrics, which started with The unprofitable SaaS business model trap , COC: a new metric for cancellations , The mistake of 1/c in LTV , and SSEBITDA: Steady-state profit metric. Documented in this great SaaS metrics overview by David Skok.)

Metrics 244
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Deep dive: Cancellation rate in SaaS business models

A Smart Bear: Startups and Marketing for Geeks

As a preamble to the metrics, it’s useful to know what you’re measuring and why it’s vital. We had a spike in this metric in February at WP Engine when our Internet provider themselves had a datacenter-wide catastrophe which brought us down for twelve hours; of course not all spikes will have such obvious causes.