Operating costs vary tremendously between different businesses but are typically slightly lower for SaaS businesses. If you’re wondering what sort of operating expenses would count within this equation for a SaaS company, it could be things like paying your staff to develop features, paying for your office space, any further labour costs, utilities, or any other factor which you must pay for to continue selling your SaaS product. When discussing income, you typically do revenue minus expenses, although we’ll discuss this later. This figure is much more important as it will allow you to plan a future budget plan, with your net profit helping you to understand more about the total amount of money your business is creating for you. Often referred to as the company’s bottom line, this is the real figure about how much your company generates after all business expenses are considered. Income, on the other hand, is about the total profit your business generates after taking away any expenses from the equation. If you want to understand your company's revenue over a certain period, it’s always better to look at that specific space of time instead of using any extrapolation. ![]() The latter option is especially useful if you tend to have above-average churn, as there would be a lack of consistency within your month-to-month revenue figures that would skew the yearly data. From there, you could also extrapolate the data to an annual recurring revenue figure or simply run the calculations for the year as a whole. If your business offers more than one method of billing clients, you’ll have a lot more flexibility when calculating your total revenue.įor example, if you’re only interested in the monthly revenue earned, then you could calculate monthly recurring revenue. SaaS businesses often offer monthly, quarterly, or annual billing cycles. There are several ways to calculate revenue within SaaS businesses due to the different payment structures that a company can rely on. Revenue is the first factor businesses will calculate, as further statistics can be concluded from there. Typically, revenue is understood as what is known as ‘top line’ or ‘gross sales’ metrics, with this being financial documentation of everything that’s coming into a business. ![]() When refining this for a SaaS business, it typically means that the total amount generated by all of your subscriptions is recurring. When working out revenue, you need to calculate the total income generated by your business activities. Let’s quickly move through the main definition of each of these terms, explaining what each entails. But, considering that they use the same unit and have similar methods to work these metrics out, they are often confused. What is the difference between revenue and income?Īlthough both income and revenue deal with financial data and money in general, they are not the same metric and cannot be considered as much. Other metrics you should keep an eye on.What is the difference between revenue and income?.In this article, we’ll move through all things revenue and income, demonstrating exactly what you need to know when tracking these metrics. While often confused or considered the same thing, revenue and income are actually completely different and require different mathematics to track. Two core metrics, revenue and income, are equally as important to track as an overall number of subscriptions. But, as a business owner, the number of subscriptions your company is actively profiting from isn’t the only thing you should be paying attention to. Considering this industry has grown 5x since 2015, it’s no wonder that keeping subscriptions high in an increasingly competitive market is a priority. Many business owners tend to focus on the subscription portion of their business. Whether you’re providing a monthly service that helps clients or a platform that they integrate into their day-to-day activities, if you want to keep money flowing, you need to keep subscriptions high. ![]() When running a software as a service (SaaS) business, selling recurring subscriptions is the core element that generates capital for your company.
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