SaaS Glossary.79 terms, no filler.
Revenue Metrics
22 terms01Monthly Recurring Revenue (MRR)MRRThe predictable revenue a subscription business expects to collect every month from active customers.02Annual Recurring Revenue (ARR)ARRThe annualised value of a subscription business's recurring revenue, used for high-level planning and fundraising.03Customer Lifetime Value (LTV)LTVThe total net revenue a business expects to earn from a customer over their entire relationship.04Net Revenue Retention (NRR)NRRThe percentage of recurring revenue retained from existing customers after accounting for churn, downgrades, and upgrades.05Gross Revenue Retention (GRR)GRRThe percentage of recurring revenue retained from existing customers, excluding any expansion revenue.06Annual Contract Value (ACV)ACVThe average annualised revenue of a single customer contract, normalised to a one-year period.07Total Contract Value (TCV)TCVThe total revenue committed in a contract over its entire term, including one-time and recurring fees.08Average Revenue Per User (ARPU)ARPUThe average revenue generated per active user or account within a given time period.09Revenue ChurnRevenue ChurnThe percentage of recurring revenue lost in a period from cancellations and downgrades, excluding expansion.10Expansion RevenueExpansionAdditional revenue generated from existing customers through upsells, cross-sells, seat additions, or usage growth.11Rule of 40Rule of 40A benchmark stating that a healthy SaaS company's revenue growth rate plus profit margin should sum to at least 40%.12Payback PeriodPaybackThe number of months required to recover the cost of acquiring a customer from the revenue that customer generates.13CAC Payback PeriodCAC PaybackThe time required to recover the customer acquisition cost through gross margin-adjusted revenue from that customer.14Revenue Per EmployeeRPETotal annual revenue divided by full-time equivalent employee count, measuring operational efficiency.15SaaS Gross MarginGross MarginThe percentage of revenue remaining after deducting the direct costs of delivering the software service.16Operating LeverageOp. LeverageThe degree to which fixed costs remain stable as revenue scales, allowing profit margins to expand with growth.17ARR BridgeARR BridgeA waterfall analysis showing how ARR moved from one period to another, decomposed into constituent growth and loss components.18Contraction MRRContractionThe monthly recurring revenue lost from existing customers who downgraded their plan but did not cancel entirely.19Expansion MRRExpansion MRRAdditional monthly recurring revenue generated from existing customers through upgrades, seat additions, or usage growth.20New MRRNew MRRMonthly recurring revenue added from customers who are entirely new to the product and were not customers in the prior period.21Churned MRRChurned MRRMonthly recurring revenue lost from customers who cancelled their subscription entirely during the period.22Reactivation MRRReactivationMonthly recurring revenue from previously churned customers who returned and resumed a paid subscription.
Growth Metrics
14 terms01Customer Acquisition Cost (CAC)CACThe total sales and marketing spend required to acquire one new paying customer.02UpsellUpsellPersuading an existing customer to upgrade to a higher-priced plan or add more of what they already use.03Cross-sellCross-sellOffering existing customers a complementary product or module that adds value alongside what they already use.04Cohort AnalysisCohortA method of grouping users by a shared characteristic — typically sign-up date — and tracking their behaviour over time.05Product-Market Fit (PMF)PMFThe degree to which a product satisfies strong market demand — evidenced by organic growth, high retention, and unprompted customer enthusiasm.06Total Addressable Market (TAM)TAMThe total revenue opportunity available if a product captured 100% of its target market.07Serviceable Addressable Market (SAM)SAMThe portion of TAM that your product can realistically serve given your current business model, geography, and capabilities.08Serviceable Obtainable Market (SOM)SOMThe realistic share of SAM you can capture in the near term given competition, sales capacity, and execution capability.09Month-over-Month Growth (MoM)MoMThe percentage change in a metric — typically MRR or users — from one month to the previous month.10Quarter-over-Quarter Growth (QoQ)QoQThe percentage change in a metric from one fiscal quarter to the immediately preceding quarter.11Year-over-Year Growth (YoY)YoYThe percentage change in a metric compared to the same period in the prior year, eliminating seasonal distortions.12Magic NumberMagic NumberA sales efficiency ratio measuring how much new ARR is generated for every dollar spent on sales and marketing.13Activation RateActivationThe percentage of new sign-ups who complete a defined set of actions indicating they have experienced the product's core value.14Aha MomentAha MomentThe specific moment during onboarding when a user first experiences the core value of the product and understands why it matters.
Customer Metrics
10 terms01Churn RateChurnThe percentage of customers or revenue lost during a given period due to cancellations or downgrades.02Logo ChurnLogo ChurnThe percentage of customer accounts that cancel in a period, regardless of how much revenue they represent.03Daily Active Users (DAU)DAUThe number of unique users who engage with a product on any given day.04Monthly Active Users (MAU)MAUThe number of unique users who engage with a product at least once during a calendar month.05Weekly Active Users (WAU)WAUThe number of unique users who engage with a product at least once during a seven-day window.06Net Promoter Score (NPS)NPSA survey-based metric measuring how likely customers are to recommend your product, scored from −100 to +100.07Customer Satisfaction Score (CSAT)CSATA transactional survey metric measuring how satisfied a customer was with a specific interaction or experience.08Customer Health ScoreHealth ScoreA composite metric combining product usage, engagement, and relationship signals to predict a customer's likelihood of renewing or churning.09Onboarding Completion RateOnboarding RateThe percentage of new users who complete all steps in the designed onboarding sequence.10Time to Value (TTV)TTVThe elapsed time between a customer signing up and experiencing their first meaningful value from the product.
Pricing Models
8 terms01FreemiumFreemiumA pricing strategy offering a permanently free tier alongside paid plans with more features or usage.02Per-Seat PricingPer-SeatA pricing model that charges customers based on the number of users who access the product.03Usage-Based PricingUBPA pricing model where customers pay based on how much they consume — API calls, messages sent, records processed, or similar units.04Flat-Rate PricingFlat-RateA single fixed price that gives customers access to all features with no limits on users or usage.05Tiered PricingTieredA pricing structure offering multiple plans at different price points, each with a distinct set of features or limits.06Hybrid PricingHybridA pricing model that combines two or more pricing mechanisms, such as a base subscription plus usage-based charges.07Free TrialFree TrialA time-limited or feature-limited access period that lets prospects experience the full product before committing to a paid plan.08Freemium vs Free TrialFreemium vs TrialThe strategic choice between offering permanently free access versus time-limited access to drive conversion.
Business Models
12 terms01Product-Led Growth (PLG)PLGA go-to-market strategy where the product itself is the primary driver of user acquisition, conversion, and expansion.02Sales-Led GrowthSLGA go-to-market strategy where a dedicated sales team is the primary engine for acquiring and expanding revenue.03Community-Led GrowthCLGA go-to-market strategy where an engaged user community drives product adoption, retention, and organic expansion.04Micro-SaaSMicro-SaaSA small, focused software-as-a-service business typically built and operated by one person or a tiny team targeting a narrow niche.05Bootstrapped SaaSBootstrappedA SaaS company built without external venture capital, funded entirely by founder capital and early customer revenue.06Land and ExpandLand & ExpandA sales strategy that acquires a customer with a small initial deal, then grows revenue as adoption spreads across the organisation.07B2B SaaSB2BSoftware-as-a-service sold to businesses rather than individual consumers, with longer sales cycles and higher contract values.08B2C SaaSB2CSoftware-as-a-service sold directly to individual consumers for personal use, with lower price points and higher volume.09Horizontal SaaSHorizontalSaaS products designed to serve a broad range of industries with a common need, such as project management or CRM.10Vertical SaaSVerticalSaaS built specifically for a single industry or niche, offering deep workflows tailored to that sector's unique needs.11White-Label SaaSWhite-LabelA SaaS product that customers can rebrand and resell to their own clients as if it were their own product.12Go-to-Market Strategy (GTM)GTMThe plan defining how a company will bring a product to market, reach its target customers, and achieve a competitive position.
Technical Terms
5 terms01API-FirstAPI-FirstA development philosophy where the API is the primary interface, designed before the user interface is built.02Headless SaaSHeadlessA SaaS architecture that separates the backend capabilities from any specific user interface, exposing functionality purely through APIs.03Multi-TenantMulti-TenantAn architecture where a single software instance serves multiple customers with logical separation of their data and configuration.04Single-TenantSingle-TenantAn architecture where each customer runs on a dedicated instance of the software with its own isolated infrastructure.05Uptime SLAUptimeA specific SLA guarantee defining what percentage of time a service will be operational, measured monthly or annually.
Operations
8 terms01Burn RateBurnThe rate at which a company spends its cash reserves each month before reaching profitability.02RunwayRunwayThe number of months a company can operate at its current burn rate before running out of cash.03Ideal Customer Profile (ICP)ICPA detailed description of the type of company or customer that receives the most value from your product and is most likely to succeed.04Service Level Agreement (SLA)SLAA contract that defines the performance standards a vendor commits to, including uptime, response times, and remedies for failures.05North Star MetricNSMThe single metric that best captures the core value delivered to customers and predicts long-term business success.06Objectives and Key Results (OKR)OKRA goal-setting framework pairing an ambitious qualitative objective with measurable key results that define what success looks like.07Customer SuccessCSThe organisational function responsible for ensuring customers achieve their desired outcomes with the product, driving retention and expansion.08Account ManagementAMThe sales-oriented function responsible for growing revenue from existing customers through renewals, upsells, and relationship management.
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