4 responses to “The math of SaaS revenue growth”

  1. Paul Q

    Brilliant post Derek, trying to tell traditionally billers about the rule of 78 is a never ending task

  2. dpilling

    Thanks Paul. It takes a fundamental mental shift to go from a product oriented billing view to a recurring view. And that is only one of the many elements that separates SaaS from its software brethren.

  3. Sridhar

    Rule of 78 – that’s very useful. Great post.

  4. Mike

    I’m unclear on the distinction between base-line revenue and run-rate revenue you present. in your example, the company can end 2010 with revenue of $4.485 mil, but a run-rate revenue of $5.16 mil.

    paradoxically, since you’ve indicated that run-rate > base revenue, this would mean the base revenue for 2009 should be less than $3 mil. (the run rate). But you’ve also added the projected revenue for 2010 plus current run rate for 2009 to get the new base for 2010. where then does the new (higher) run rate for 2010 come from? could you clarify this?