📓Key Concepts to Learn

1. Managed Services in SaaS: Managed services in the context of SaaS refer to services that are delivered on a subscription basis and are human-powered 👨‍💼💻. Unlike professional services, managed services involve ongoing actions by people to generate revenue regularly 💰. It is essential to differentiate and track managed services separately from other revenue streams to understand the financial dynamics of the business accurately 📈

2. Revenue Streams and Tracking: Modern SaaS companies often have multiple revenue streams, including managed services 💼. Tracking each revenue stream separately is crucial for assessing the efficiency and profitability of the business 📊. By accurately reporting revenue and cost of goods sold (COGS) for managed services, companies can calculate margins for each revenue stream, providing insights into the financial health of the business 🧾

3. Importance of Clear Reporting: Clear reporting of managed services in both the revenue and COGS sections is vital for external stakeholders, such as investors or potential acquirers 💼👀. Understanding how managed services contribute to revenue growth and whether additional hiring is required as revenue scales up is essential for making informed business decisions and demonstrating operational efficiency to external parties 🤝

4. Strategic Implications: The management of managed services goes beyond financial reporting and impacts strategic discussions during events like exits, due diligence, or fundraising 🚪🔍💸. Demonstrating efficiency in delivering managed services can influence assessments of the company's scalability and operational effectiveness, making it a crucial aspect in strategic conversations with external parties 📊✨.

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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.

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Best regards,
Ben Murray
Host of SaaS Metric School

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