🎙️ Hey there, SaaSpreneurs!🎙️

Ben Murray here, and I'm excited to share with you some crucial insights about recording subscription revenue and discounts that I've learned from reviewing hundreds of SaaS P&Ls.

In this newsletter, we'll discuss why accurately tracking net revenue is essential for calculating key metrics like MRR and retention schedules.

So, grab a coffee, settle in, and let's dive into the world of SaaS metrics together! 🚀

And don’t forget! My last SaaS Metrics course of the year begins Sep 17th.

You can also listen to this episode here.

📓Key Concepts to Learn💡

1. Subscription Revenue 💰: Subscription revenue refers to the revenue generated from customers who pay a recurring fee for access to a product or service. In the context of SaaS (Software as a Service) companies, subscription revenue is the primary source of income. Of course, that is changing with variable revenue streams.

2. Discounts 🎉: Discounts are reductions in the standard price of a product or service. In the SaaS industry, discounts are often offered to customers as an incentive to purchase a subscription or to reward long-term customers.

3. Net Revenue 📈: Net revenue is the total revenue earned after deducting discounts, returns, and other allowances. It represents the actual amount of money a company receives from its sales. In the SaaS context, net revenue is the actual revenue. It’s crucial for calculating accurate metrics and understanding the company's true financial performance.

4. SaaS Metrics 📊: SaaS metrics are key performance indicators (KPIs) that help SaaS companies measure their success and growth. These metrics include Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLTV), and Churn Rate. Just to name a few! Accurate tracking of net revenue is essential for calculating these metrics correctly. We don’t input gross revenue into these metrics.

5. Revenue Recognition 🧮: Revenue recognition is the accounting principle that determines when and how revenue is recorded in a company's financial statements. In the SaaS industry, revenue recognition can be complex due to the business model's subscription-based nature. Recording subscription revenue accurately and consistently is important to ensure the integrity of financial reporting.

How are you recording and tracking discounts?

Ready to supercharge your SaaS business? Join Ben’s SaaS community with over 7,000 members for exclusive content. Don't miss out — maximize your SaaS knowledge today!

If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge of essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,

Ben Murray
Host of SaaS Metric School

P.S. Don't forget to subscribe to our podcast and share it with your SaaS business buddies. Together, let's conquer the world of SaaS metrics!

Apple Podcasts
Spotify
YouTube