Category Archives: Personal Finance

6 Financial SaaS Metrics Explained

Over the last few years we have seen a huge increase in the number of SaaS (software as a service) products available. These are automated services which are often delivered over the Internet. Such is the quality of the modern day SaaS that it is often impossible to recognise their automated nature. 

It is important to focus on various SaaS metrics to monitor the success of your service, and see where improvements can be made.

How to benefit from an automated service

There are numerous sectors which benefit from SaaS, one example being the worldwide financial markets – involved in many areas of everyday life. As a consequence, it was no surprise to see the increasing use of so-called robo advisors, which have been around for some time. This particular service is very popular in the Canadian financial markets, especially pension fund investments. These automated services are able to pinpoint the best investments in Canada for your particular pension fund requirements. As a business, there are numerous metrics which should be considered when assessing the success of such automated services.

Is success always measured by money?

As a business, the most natural way to measure the success of any automated service is to look at the short, medium and long-term financial impact. In many cases the automated nature of the services allows companies to focus on marketing, charges and other issues which will impact long-term take up. So, what are the most important financial SaaS metrics?

Customer churn rate

There is a natural tendency for businesses to focus on new customers, while often neglecting existing customers. For many people this is one of the most important Saas metrics and can highlight areas where improvements may be possible. If you look at simple customer figures this may not tell the whole story. You may be attracting a greater number of new clients than you are losing on a monthly basis. At first glance, this would give the impression that your business is growing and becoming more successful. However, what about the lost clients and their lost income?

When attracting new clients, there is a cost in the shape of your marketing budget. So for example, if you spend $100,000 a year on marketing and attract 1000 new clients, each client is costing you $1000. If you are able to retain an existing customer for another year, there is no additional cost. While the need to focus on growing your business and attract more clients is vital, client retention is also very important. Even if you have a relatively low customer churn rate, it is worth investigating why customers are leaving. It may simply be poor communication or there may be elements of the service you can improve or adjust. Also, if there are issues which are causing customers to leave then it is likely that new customers will at some point experience these issues – and leave. 

Customer acquisition cost (CAC)

As we touched on above, it is fairly easy to calculate customer acquisition costs. The trick is to find marketing channels which focus on your target market, and maximise your exposure in these areas. There are various marketing techniques available today many of which are covered in the Whisbi’s interactive marketing guide. Virtual events, team training, crisis communication, video broadcasts and high-profile product launches are all important elements of modern day marketing. Remember, if you arent using these new techniques you can bet your bottom dollar your competitors are.

There are many factors to consider when looking at CAC such as:-

  • Base cost of new customers
  • Customer churn rate associated with different marketing channels
  • Long-term value of different customer groups
  • Recovery period for CAC

So, you may find that some of the cheaper marketing channels do not attract long-term clients. Those which are a little more expensive, but perhaps more focused might attract more long-term customers. In that scenario, it would make sense to focus on the marketing channel offering the best long-term return on capital invested. There may also be ways and means of improving your service, to retain those from less expensive marketing channels. However, this is likely down to the actual target group. While the CAC calculation is fairly simple, it is very important to consider the wider picture.

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Months to recover CAC

If you have enough money to spend on marketing you will eventually attract customers. The key is to recover the CAC as soon as possible while also maintaining one eye on the customer churn rate. If your costs are too high, you may maximise your short-term income but may lose a long-term client. It is therefore important to find a balance between the CAC and your charges. 

There is a very simple calculation when it comes to the months to recover CAC metric. As well as the CAC this calculation involves monthly recurring revenue (MRR) and gross margin (GM):-

CAC / (MRR x GM)

If we assume:-

CAC = $1000

MRR = $100

GM = 50%

The calculation will be as follows:-

$1000/ ($100 x 50%) = 20

So, using this calculation we know that the gross margin per month is $50 per client. It would therefore take 20 months to pay back the original $1000 customer acquisition cost. The lower the months to recover the CAC figure, the faster the payback period. However, as mentioned above, it is important to find a balance between a quick return and retaining customers in the longer term.

Annual recurring revenue (ARR)

While the term is relatively straightforward, what is ARR? The key to any successful business is ARR which should continue to grow as you build your business. As we are looking forward with ARR, it is not useful to simply add revenues for the previous 12 months. In order to look forward, you would take the latest monthly recurring revenue (MRR) figure and simply times this by 12 to give an annual figure. We can further refine this figure by taking into account the monthly recurring revenue churn rate – the value of client contracts lost each month. We have put together an example below:-

MRR = $100,000

MRR Churn = $10,000

The calculation will be as follows:-

($100,000-$10,000) x 12 = $1,080,000

Calculating ARR is not an exact science because you have no idea what may or may not happen over next 11 months. However, using the latest information to hand for this calculation, can offer an interesting indication of long-term business trends.

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Customer lifetime value (CLV)

At first glance it may seem difficult, if not near impossible, to calculate the value on the expected relationship with an average customer. This is referred to as the customer lifetime value (CLV) and is a very interesting indication of the trend in long-term customer income. How does it work?

There are two variables with this calculation:-

Customer lifetime rate = 1 / Monthly churn rate

Average revenue per account = Annual income / Number of customers

In this calculation we will use the following figures:-

Churn rate = 2%

Annual income = $100,000

Number of customers = 100

So the calculation is as follows:-

Customer lifetime rate = 1 / 0.02 = 50

Average revenue per account = $100,000 / 100 = $1000

CLV = $1000 x 50 = $50,000

The customer lifetime value is a very important metric which is heavily influenced by customer retention percentages. The more customers you retain, the lower the churn rate, greater your income and the higher the customer lifetime value. If you were looking to sell your business in the future, this would be a very important metric for a potential buyer.

Lead to customer rate

The lead to customer rate is also another useful SaaS metric. It is all good and well attracting numerous leads each month but they need to be converted. For example, if you were able to attract 1000 new customer leads in one month but only converted 10, this would be a lead to customer rate of 1%. If you could increase the number of leads converted to 50, this would significantly increase the lead to customer rate to 5%. There are three main elements to monthly recurring revenue business models which are:-

  • Lead generation
  • Lead conversion
  • Customer retention

Comparing and contrasting these SaaS metrics each month will give you an idea of how different marketing techniques or changes in your monthly fees are impacting business. Unfortunately, it is easy to fall into the trap of focusing on new clients. That is all good and well, but if you have a high client churn rate they won’t stay with you for very long. You need to find a balance when focusing resources on attracting new customers, servicing customers and retaining customers.


When using a monthly recurring revenue business model it is very easy to focus on the inflow of new customers and new funds. The fact that you may be leaking existing clients on a monthly basis can sometimes go unnoticed. We often see this in the banking and insurance industries, attractive promotional offers for new clients with existing clients paying higher rates. Remember, there is a marketing cost in attracting new clients, while existing clients are effectively free. It is very important to look at the wider picture, appreciate the numerous SaaS metrics and monitor trends.

7 Reasons Why You Should Consider Applying for a Personal Loan Online

The rise of the online lending platforms can help solve your unanticipated money concerns without going to the bank. The online personal loan is the easiest, fast, convenient, and effective way to borrow money. Unlike most loans, the best online personal loans work best if you use them for the right reasons.

So, before taking this type of loan, you have to evaluate whether it is worth it because sometimes the interest rate may be high than other secured loans. In most cases, these loans come handy when consolidating high-interest debts or making a big purchase. Here are more reasons why it’s high time to settle for a personal loan.

A Go-To Option for Your Home Renovation Project

Many homeowners will opt for a home loan if they are thinking of investing in a home. But, if you want to repaint your house in anticipation of a festival or change your house architecture in preparation for an important family event, a personal loan may be handy. This is because you will never have to part with collateral. Still, the tenure for such loans is short, which means that you’ll never worry about bearing such a loan burden for a long time.

Debt Consolidation

This is a rational reason for considering a personal loan for different reasons. First, if you have taken several loans or have credit cards with different balances and interest rates due, you’re bound to be in great financial trouble. This is where a personal loan comes handy. By applying for an online personal loan to consolidate your loan, you’ll have combined several outstanding balances to a single monthly payment.

By grouping debt in this way, it is much easier to create a timeframe that can help you clear any outstanding balances without worrying about getting overwhelmed. The benefit of using a personal loan to pay off credit cards is that it comes with a low-interest rate. Such an interest rate on your loan means that it reduces the time you take to repay the loan and interest that accumulates over time.

Handle Your Emergencies with Ease

Emergencies happen unexpectedly, and when they do, it would be beneficial if you consider applying for a personal loan online. For instance, it may seem uncomfortable to consider applying for a personal loan when you are bereaved, but it can be a helpful resource when you have lost one of your family members. Funeral expenses can be costly.

By taking into account funeral home services, a casket, and a burial plot, the costs can quickly accumulate to thousands of dollars. In such a case, applying for a personal loan to cater to the deceased final costs is something you should consider. Medical emergencies are still another reason why you may need to apply for this type of loan. Some of the treatments that may require you to take a loan include; fertility treatments, cosmetic surgery, and dental work.

A Personalized Application and Repayment Criteria

One of the merits of taking a personal loan is that you don’t need to have a great credit score before you get them. Traditional banks will always look at your credit history before they think about approving you for a loan. The greatest concern is that most people hardly have the credit score that banks are looking for. Online personal loans are a great alternative because as long as you can show that you have the means to pay a loan, you stand a chance to repair your credit.

You can still work with your lender to create a favorable payment schedule that suits your needs. They will sometimes look at your budget before determining the optimal way for you to repay the loan. Such personalization can make you feel appreciated, unlike traditional banks that set dates without worrying whether you can fit the numbers in your budget.

Cover Wedding Expenses

Everyone wants their big day to be colorful, and since you’re going to invite your distant friends and family, your budget can rise pretty quickly. On such an occasion, newlyweds don’t hold back on their spending, and between the cost of clothes, food, and jewelry, they may end up running out of cash before all the requirements are met.

If you happen to be in such a situation, applying for a personal loan online can help fulfill your requirements.

Improves your Credit Score

Your credit score is calculated based on how prompt you repay your loan. So, if you have a better credit score, you stand to have better repayment terms the next time you get a loan. By taking your loan in a small amount and repaying it within a given timeframe, you’ll boost not only your credit score but also improve your creditworthiness.

Lenient Credit Terms with No Collateral

Applying for a personal loan online comes with more favorable terms than charging expenses to a credit card. Credits cards come with high monthly interest rates that can sometimes make it challenging for most people to afford the monthly minimum payments. Personal loans don’t just come with lower interest rates; you still don’t have to part with any collateral.

Many traditional banks will require you to provide some form of collateral. You’ll then have to part with some form of collateral in the case when you default on such loans. This is something you do not have to worry about when taking a personal loan online. Your word with your online personal lender is enough for them to trust that you will repay the loan. This saves you sleepless nights wondering whether you made the right choice.

Wrapping Up

A personal loan can help you achieve more than what is outlined in this guide. However, it’s essential to remember that regardless of your circumstance, such loans need to be repaid. Whether you are using the loan to consolidate your debt or pay for wedding expenses, you should use such a financial resource responsibly.

You Need to Know About These Taxes You Can Write Off

When it comes to taxes, we all know how stressful it can be just sorting out what you even need to pay. But there is a way for you to lower that stress and save money as well, and yes, we are talking about tax deductions. Many people aren’t even aware of all the possible deductions, but we believe that these deductions should be common knowledge, and that’s where this article comes in. Here, we have listed some of the tax deductions that, if applicable to your situation, can greatly help you when it comes to taxes!

First Things First

Now before we even begin listing the possible deductions, let’s talk about the basics regarding tax deductions, in case you are not so familiar with them. So, what are tax deductions? It’s pretty simple – basically, a tax deduction lowers your taxable income hence reducing your tax liability. What you need to do is to subtract the amount of the tax deduction from your income, and that makes your taxable income lower, and, lower your taxable income, the lower your tax bill.

What About Tax Credits?

A tax credit is a straightforward reduction in your actual tax bill. Not a lot of credits are refundable though, but those that are, you can do the following – say you owe $300 in taxes but qualify for a $1,000 credit. In that case, you’ll get a check for the difference of $700.

How Can You Claim Tax Deductions?

When it comes to different ways to claim tax deductions, there are generally two options. You have to choose only one regarding each tax deduction, but to be able to even decide on which one, let’s explain the options.

Standard Deductions

This is the simplest option that there is, and basically, it’s a deduction in your adjusted gross income based on your filing status. So, the amount deducted differs if you are single, married if you are filing taxes separately from your partner or not. If you are over 65 years old, the standard deduction is bigger.

Itemized Deductions

This is a completely different option than the last one since it’s not treating the whole taxes as a one, but you get to cut your taxable income by taking any of the hundreds of available tax deductions that you qualify for.

Now that we have covered the basics, let’s get to the part where we talk about the actual deduction options!

Home Office Deductions

Do you work from home? If you do, this deduction can be a big money saver if you use a  part of your home regularly, and exclusively for business. As experts on home office deduction explain, you don’t need to have a sector of your home dedicated to the business, even a desk count. Basically, all details aside, if you work from home – IRS allows you to write off associated rent, utilities, real estate taxes, repairs, maintenance, as well as other related expenses from your taxes.

Charitable Donations Deductions

Did you know that you can deduct money for goods given to charitable organizations, as well as out of pocket expenses for charitable work? Basically, if you itemize your deductions, you are able to subtract the value of individual items. On the other hand, if you opt for the standard deduction, you will be able to deduct around $300, based on the factors discussed earlier.

Lifetime Learning Credit

You are probably familiar with the fact that the tax code offers a number of different deductions options regarding college students, as well as those regarding ones that have already graduated. The great thing with lifetime learning credit is the fact that, unlike many other options, it doesn’t discriminate based on your age. So, what does the lifetime learning credit do? Basically, it can provide up to $2,000 per year, taking off 20% of the first $10,000 you spend for education after high school while you are trying to increase your education.

401(k) Contribution Deductions

A 401(k) plan is great for many different reasons, one of them being that it’s a highly efficient way to accumulate financial resources for retirement, but there are also some tax benefits that come with this plan. The thing is, the IRS isn’t going to tax what you divert into a 401(k) if it’s directly from your paycheck. For 2020, you can divert up to $19,500 per year into your 401(k) account, and if you’re 50 or older, you can contribute even up to $26,000. In most cases, these retirement accounts are usually sponsored by employers, but self-employed people can open their own 401(k)s as well.

Self-Employment Taxes Deduction

There are some great things that come with being self-employed, the first one probably being all the freedom and customizability when it comes to organizing your work. That being said, there are some cons about being self-employed as well – you have to pay 15.3% of your income for social security and medicare taxes, in contrast with regularly employed situations where the portions are ordinarily paid by both employee and employer. There is a tax deduction that can be a small consolation though – you get to deduct the 7.65% employer portion off your income taxes.

Gambling Loss Deduction

Many people have never heard of gambling deductions since it’s a pretty unusual thing to be able to deduct from taxes. Nevertheless, it can be done – gambling losses and expenses are deductible but only to the extent of your winnings. That being said, spending $200 on lottery tickets isn’t deductible by itself, but if you win and report it. That way, you can deduct the gambling expenses, but no more than the amount you win.

Tax Deductions For Teachers

It’s common knowledge that many teachers have to reach into their own pockets every now in order to purchase different items necessary for the classroom. While it can sometimes seem like nobody appreciates that gesture, it isn’t like that. In fact, the IRS does allow qualified K-12 educators to deduct up to $250 for materials that they have bought. And in case you don’t itemize, don’t worry – the amount in question gets subtracted from your income.

After you have finished the article, you have probably realized that there are a lot more options when it comes to saving money through tax deductions that you have been aware of – and there are a lot more different deductions that you can make! It all comes down to doing research and taking the time to look for these options, and then taking action and claiming those deductions!