🎙️ Hey there, SaaSpreneurs!🎙️

Before we dive in…today is the final day to enroll in my final SaaS metrics course of the year!

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Today, we're tackling the burning question: Are onboarding expenses part of COGS or sales expenses? 🤔

I'll explain why CAC stops when you land a new customer and how onboarding, including setup, configuration, and training, falls under services expense in the COGS section. 📊

You can also listen to this episode here.

📓Key Concepts to Learn💡

1. CAC (Customer Acquisition Cost) stops at the time of customer acquisition 🛑 - CAC includes expenses related to acquiring new customers 🙋‍♂️💸 - Once a new customer is landed, any expenses after that point are not considered part of CAC ✋ But we must be careful if we have a PLG motion!

2. Onboarding expenses are classified as COGS (Cost of Goods Sold) 📊 - Onboarding includes setup, configuration, and training of customers after they have been acquired 🔧👨‍🏫 - These expenses are incurred to get the customer up and running with the product or service 🏃‍♂️💨 - Onboarding expenses are recorded in the COGS section, above gross profit in the financial statements 📄 

3. Services expenses should be managed as a separate business unit 🏢 - If there is a dedicated team for onboarding new customers, their costs should be isolated 👥💰 - This allows for better tracking and understanding of the carrying cost of onboarding 🔍💡 - Services revenue (if onboarding is charged) should be recorded separately from other revenue streams 💵📈 

4. Onboarding expenses are not sales costs ❌💼 - Although onboarding is related to new customers, it occurs after the sale is made 🤝✅ - Sales costs are expenses directly related to the sales motion and acquiring new customers 📞🤑 - Onboarding expenses are post-sale and therefore not considered part of the sales costs ⏰💸 

Check out my post here on the metrics you should track for your professional services team.

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If you found this episode helpful, 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!

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