Negative Churn

March 4, 2015March 6, 2015 Derek Pillingchurn, Customer Loss Churn, Negative Churn, Organic Growth, Revenue Churn, Revenue Lift2 Comments

In a board meeting yesterday, we had a brief discussion around “negative churn”. Negative churn is a catchy phrase and apparently a hot-topic in some SaaS circles. I like some of the concepts and disciplines that an understanding of negative churn implies, but I also think it is an unnecessary concept that actually makes it more difficult to understand the inner workings of an MRR based SaaS business. Some background…

What is Negative Churn?

Negative Churn is an increase in revenue which occurs when the change in revenue within an installed base of customers is net positive from one period to the next. Negative Churn implies that the revenue gained from existing customers who purchase more over time exceeds revenue lost from existing…

Basics of Unit Economics Analysis

January 16, 2014January 25, 2014 Derek Pillingaverage customer lifetime, capital expenditures, churn, contribution margin, marginal operating costs, unit economicsLeave a comment

When an investment passes our first-screen at Meritage Funds, the first deep-dive we typically do is on the unit economics of the business. Unit economics are the fundamental financial building blocks of a business. If you can pin down the unit economics, you can determine contribution margins, break-even points and perform ROI calculations all of which can help to determine whether a Company’s economic engine works. Without an understanding of unit economics, predicting whether a business can be profitable in the long-term is all guess-work.

The economics of on-demand services

June 2, 2009January 25, 2014 Derek PillingARPU, churn, customer acquisition cost, on-demand, PaaS, SaaS, variable costs3 Comments

A post by Ben Kepes over at CloudAve got me thinking about the economics of on-demand services, so I thought I’d do a quick blog. On-demand services businesses come in all shapes and sizes. This is particularly true today with the emergence of SaaS, where the vendor diversity is staggering. Despite the diversity of services – ranging from traditional communications services (think voice, video and data) to highly verticalized SaaS applications (think point of sale applications for yoga studios) – the fundamental economic building blocks of these businesses are, for the most part, the same.

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Negative Churn

What is Negative Churn?

Basics of Unit Economics Analysis

The economics of on-demand services