Glossary

What is the Cost of Goods Sold (COGS) in SaaS?

Understand the Cost of Goods Sold (COGS) in SaaS companies, including server costs, third-party licensing fees, direct labor, software maintenance, and bandwidth costs. Learn how to calculate COGS and its impact on financial health, as well as strategies for optimising COGS to maximise gross margins and profitability.

What is Client Offboarding?

Client offboarding refers to the formal process of transitioning a client out of your service structure, ensuring all contractual obligations are met and the separation is smooth. It's crucial in B2B environments for maintaining professional relationships and setting the stage for future interactions.

What is Expansion Revenue?

Expansion revenue in SaaS refers to the additional recurring revenue generated from existing customers through upsells, cross-sells, and add-ons. Adapting offerings to meet evolving needs is crucial for financial growth and deepening customer relationships. Calculating expansion revenue involves subtracting the beginning monthly recurring revenue (MRR) from the ending MRR, focusing only on existing customers.

What is Net Dollar Retention (NDR)?

NDR measures revenue changes from existing customers, revealing expansions, contractions, and churn, offering insights crucial for growth. Calculated by adjusting starting revenue with expansions and subtracting churned revenue, NDR is pivotal for sustaining growth and customer satisfaction, demanding strategies like enhancing customer success initiatives and optimizing pricing to overcome challenges.