Cloud Computing: GMPP, rCAC and the Importance of Component Level Analysis
We have developed a framework for analyzing the unit economics of a SaaS business which is described in the attached white paper. The document outlines seven key SaaS metrics but focuses on two primary indicators of a company’s health: the gross margin payback period (GMPP) and the return on customer acquisition cost (rCAC). With these two measures we can determine how long it takes to break even on the cost of acquiring a customer, and the total return yielded on the customer acquisition investment. Our framework walks through the intermediate steps and important considerations needed to accurately benchmark against these SaaS metrics – most importantly, the need to look at component level rather than company level analysis.
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