Saas Glossary

Browse 64 saas terms defined in plain English, from the cultural dictionary of computing.

64 Saas Terms

Annual Contract Value
The yearly value of a customer contract, excluding one-time fees unless a company defines it otherwise. ACV is often used to compare deal sizes in enterprise...
Annual Recurring Revenue
The normalized yearly value of recurring subscription revenue, often used as a headline growth metric for SaaS businesses. ARR excludes one-time services and...
ARR
Annual Recurring Revenue — the value of contracted recurring revenue normalized to a one-year period. The North Star metric for SaaS businesses. Not to be...
ARR
Annual Recurring Revenue — the annualized value of active subscriptions, the single most important metric for SaaS businesses. Calculated by multiplying MRR...
ARR Growth Rate
The rate at which annual recurring revenue increases over time, usually measured year over year or quarter over quarter. Investors use it to assess momentum...
As a Service
A delivery model where a capability is provided on-demand as a managed service rather than as software or infrastructure the customer runs themselves. The...
B2B SaaS
Subscription software sold to businesses, usually with recurring revenue, account-based sales, and ongoing support or expansion opportunities. It is one of the...
Bottom-Up SaaS
A SaaS go-to-market motion where individual users or small teams adopt the product first, creating internal traction before enterprise expansion or formal...
CAC Payback
The time required for gross profit from a customer to recover the cost of acquiring that customer. Shorter CAC payback periods generally make scaling easier...
CASB
CASB is a cloud access security broker that enforces visibility and policy between users and cloud services. Security teams use it to enforce trust, reduce...
Churn
The rate at which customers cancel their subscriptions or stop using a product. A SaaS company's most watched (and most dreaded) metric. Customer churn counts...
Churn Rate
The percentage of customers or revenue lost over a given period. Logo churn counts customers lost; revenue churn measures MRR lost. Negative net revenue churn...
Cloud Access Security Broker
Cloud Access Security Broker is a policy-enforcement layer that sits between users and cloud services to improve visibility and control. Security teams use it...
Customer Churn
The rate at which customers stop using or paying for a product over a given time period. High customer churn can erase the benefits of strong acquisition.
Customer Success
The function responsible for helping customers realize value, stay engaged, renew, and often expand over time. In subscription businesses, customer success...
Deferred Revenue
Cash received from customers for services not yet fully delivered, recorded as a liability until the revenue is earned. Annual SaaS contracts often create...
Dollar Retention
A revenue retention metric showing how recurring revenue from a customer cohort changes over time after accounting for churn, contraction, and sometimes...
Expansion Revenue
Additional recurring revenue generated from existing customers through upgrades, added seats, usage growth, or additional products. Expansion revenue is a...
Free Tier
A no-cost product tier that lets users try or use a service within specific limits. In product culture free tiers are both acquisition tools and strategic...
Free Trial
A limited period during which prospective customers can use a product before paying, usually to reduce purchase friction and drive activation. Trial design...
Gross Margin
Revenue minus direct costs, expressed as a percentage of revenue, showing how much remains before overhead and operating expenses. Gross margin is a key signal...
Gross Retention
The percentage of recurring revenue retained from an existing customer base over time, excluding the positive effect of expansion. Gross retention isolates how...
Horizontal SaaS
Software that serves a broad function across many industries, such as CRM, collaboration, or analytics, rather than specializing in one vertical. Horizontal...
Land and Expand
A go-to-market strategy where you 'land' a small initial deal (often bottom-up, developer-led) and 'expand' to more teams, higher tiers, or enterprise-wide...
Logo Churn
The rate at which customer accounts or logos are lost over time, regardless of how much revenue each account represented. It differs from revenue churn, which...
LTV / CAC
Lifetime Value / Customer Acquisition Cost — the ratio of how much revenue a customer generates over their lifetime to how much it costs to acquire them. The...
Magic Number Startup
A reference to the SaaS magic number, a quick efficiency metric comparing recurring-revenue growth to prior sales and marketing spend. Investors use the magic...
Micro SaaS
A very small SaaS business, often run by one person or a tiny team, serving a narrow niche with modest but real recurring revenue. Micro SaaS is common in the...
Monthly Recurring Revenue
The normalized monthly value of recurring subscription revenue, often used as a core operating metric in SaaS businesses. MRR helps teams track momentum more...
MRR
Short for monthly recurring revenue, the normalized monthly value of recurring subscription revenue. MRR is one of the most widely tracked startup metrics...
Multi-Tenant
A software architecture in which a single application instance and infrastructure serves multiple customers (tenants), isolating their data through row-level...
Multi-Tenant SaaS
A software architecture where many customers share the same core application environment and infrastructure while their data and permissions remain logically...
Negative Churn
A situation where expansion revenue from existing customers exceeds the revenue lost from churn and contraction, causing recurring revenue from a cohort to...
Net Dollar Retention
The percentage of recurring revenue retained from existing customers over a period, accounting for expansion (upsells), contraction (downgrades), and churn....
Net MRR
Monthly recurring revenue after accounting for expansion, contraction, and churn effects, rather than just the starting base. Teams use net MRR to understand...
Net New ARR
The increase in annual recurring revenue over a period after adding new business and expansion while subtracting churn and contraction. It is a cleaner growth...
Net Retention
A measure of how much revenue from an existing customer base is retained over time after accounting for churn, contraction, and expansion. Net retention above...
Net Revenue Retention
The percentage of recurring revenue retained from an existing cohort over time after factoring in churn, downgrades, and expansion. Net revenue retention is a...
NRR
Short for net revenue retention, the percentage of recurring revenue kept from an existing customer base after churn, contraction, and expansion. It is one of...
Pinecone
A managed vector database service purpose-built for machine learning applications that need to search over high-dimensional embedding vectors at scale....
PlanetScale
A serverless MySQL-compatible database platform built on Vitess, the same technology that scales YouTube's database infrastructure. PlanetScale introduced...
PLG
Product-Led Growth — a go-to-market strategy where the product itself drives acquisition, conversion, and expansion. Users discover value through a free tier...
Pricing Page
The most scrutinized page on a SaaS website — where potential customers evaluate plans, compare features, and decide whether to buy. Best practices: 3-4 tiers,...
Pricing Tier
One level in a tiered pricing structure, usually defined by feature access, usage limits, support level, or customer segment. Tiers help companies separate...
Quick Ratio
A financial ratio used in different contexts, often either as a liquidity measure in accounting or, in SaaS, as a shorthand comparing new and expansion revenue...
Railway
A modern application hosting platform that simplifies deploying backend services, databases, and full-stack applications. Railway provides a visual dashboard...
Recurring Revenue
Revenue expected to repeat predictably over time through subscriptions, renewals, or contractual repeat billing. Recurring revenue is especially valuable...
Renewal Rate
The percentage of customers or contracts that renew at the end of a term rather than churn. Renewal rate is especially important in subscription businesses...
Revenue Churn
The amount of recurring revenue lost over time from customers leaving or downgrading, usually expressed as a percentage. Revenue churn can look very different...
Revenue Expansion
Growth in revenue from existing customers through seats, usage, pricing upgrades, or new product adoption. Revenue expansion is a major driver of strong net...
Revenue Multiple
A valuation measure expressed as enterprise value or market value divided by revenue, often used for software and growth companies where profit may still be...
Rule of 40
A software-company heuristic stating that revenue growth rate plus profit margin should total around 40 or more for a healthy balance of growth and efficiency....
SaaS Metric
Any metric commonly used to understand the health of a subscription software business, such as ARR, net retention, CAC payback, gross margin, or churn. The...
Seat-Based Pricing
A pricing model where customers pay based on the number of users or seats with access to the product. It is simple to understand and forecast, though it may...
Single Tenant
Describing a software deployment architecture where each customer gets a separate dedicated environment rather than sharing one multi-tenant system....
Subscription Economy
The broader business environment in which more products and services are sold through recurring subscription relationships rather than one-time purchases. The...
Subscription Revenue
Revenue generated from recurring subscription payments rather than one-time transactions. Subscription revenue is highly valued because it creates visibility...
T2D3
A SaaS growth shorthand meaning triple, triple, double, double, double annual growth over five years. It is used as an aspirational benchmark for breakout...
Tenant
A distinct customer environment or account boundary within a software system, often used in multi-tenant architecture discussions. Tenants separate data,...
Trial Conversion
The rate at which users who start a free trial become paying customers. Improving trial conversion often requires aligning onboarding, activation, and pricing...
Unit Economics
The revenue and costs associated with a single unit (customer, transaction, or subscription). Key metrics: LTV (Customer Lifetime Value), CAC (Customer...
Usage-Based Pricing
A pricing model where charges scale with actual product consumption, such as API calls, compute time, transactions, or storage. Usage-based pricing aligns...
Vertical SaaS
Software built for a specific industry segment rather than for broad horizontal use cases across many sectors. Vertical SaaS products often achieve stronger...
White Label
A product or service designed so another company can rebrand and resell it as its own. In software this often means customizable branding, domains, and...

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