Tips to consider when valuing a SaaS company.
Month & Annual Recurring Revenue:
Monthly Recurring Revenue (MRR) is the recurring total revenue generated from all the active subscriptions in a particular month. Annual Recurring Revenue is the annualized form of MRR.
Total revenue expected from each subscriber until the subscription is terminated.
Total amount spent on acquire a new customer.
Average Revenue per User = MRR/Total Number of Users.
CAC Payback Period:
CAC/MRR * Gross Margin
The ratio helps compare the cost spent on customer acquisition against the value they generate throughout their lifetime for the business.