An excellent blog post that looks at the high level goals of a SaaS business and drills down layer by layer to expose the key metrics that will help drive success.

What I find interesting is that the SaaS financial model seems to be a simplified version of what some other industries use. Coming from the semiconductor business (which is also 90% software these days), all this is pretty much identical, except you have 10-5000 products you are managing at different cost/price points, different customer acquisition costs, and different churn rate issues. Am I missing something here?

I also don’t see any mention of the time-value of money or reserving a portion of annual contract income to cover a percentage of customers that decide to leave before their annual term is complete.