Web Business ModelsAdvertising
Social (Facebook, Pinterest)
Content (NY Times, Youtube)
Search
Software as a Service: SaaS (Salesforce, Zendesk, Chartio)
Market Places
E-Comerce
Viral CoefficientSocial
How many users each new user brings.
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k = .8 k = 1.2
k = viral coefficientk = (# invites sent/user) * (# invites accepted/# invites sent)
Viral Cycle Time
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Social
The time it takes a user to invite other users.
RR: Recurring RevenueSaaS
RR = Revenue/Δt
ARR (Annual) = $50k/yr
MRR (Monthly) = $50k/yr / 12 months
Churn RateSaaS
How often you lose customers.
If you have 100 customers, and you lose 10 of them in a year
you have a 10% annual churn rate.
aka. attrition
ASP: Average Selling PriceSaaS
The average price that you sell your product for.
ASP = ARR / # of Customers
Why its important:Determines your sales and distribution strategy. Can you afford a sales team? Can you afford adwords?
ACS: Average Cost of ServiceSaaS
Your average cost to support and maintain a customer.
ACS = Total Expenses / # of Customers
Trend:This should ideally trend downward as your number of customers goes up.
CLTV: Customer Lifetime ValueSaaS
Average total expected revenue from a customer.
Why its important:This also determines your go to market strategy. Can you afford a sales team or adwords?
simple CLTV = ASP / churn rate
CAC: Customer Acquisition CostSaaS
The average cost to gain a new customer.
costs: adwords, sales, marketing, PR
Why its important:Acquiring a customer along with the ASP must cost less than the life time value the customer will bring in.