Glossary of SaaS terminology

When you’re starting a new business, you may encounter a lot of terms and jargon that are new to you. Even if you have a background in technology, there are likely to be SAAS-specific terms you don’t know. To help you with your search, we’ve created this glossary of SaaS terms.

In this glossary of SaaS terms you will find the meaning of the most relevant terms in the world of Software as a Service (SaaS), examples of how they apply to your business and additional resources for some terms with the ‘More‘ option.

This glossary is regularly updated with new terms and concepts to keep up to date with all the latest developments in the SaaS world and ensure you have access to the most current information.

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ARPU (Average Revenue Per User): The average amount of revenue that a customer generates for a company during a given period. It is calculated by dividing total revenue by the number of customers. More

ARR (Annual Recurring Revenue): It’s the MRR multiplied by 12, which represents a company’s annual recurring revenue.

Active Users: Refers to the number of users who have logged in and interacted with the software during a specific period of time, usually within a 30-day period. More

Agility: It’s the ability of a team or company to respond quickly to changes in the market or customer needs.

Application Programming Interface (API): It is a set of tools and protocols that allow developers to create applications that interact with a software or service.

Authentication: The process of verifying a user’s identity before allowing access to a system or application.

Authorization: The process of allowing or denying access to a resource or service based on the rights of a user or group of users.

B2B SaaS Metrics: These are the specific metrics for software-as-a-service companies that focus on the company’s performance in terms of revenue, customer acquisition, retention and growth. More

Big Data: The term used to describe large data sets that are too complex to be handled by traditional data processing tools.

CAC (Customer Acquisition Cost): The total cost of acquiring a new customer, which includes all marketing and sales expenses divided by the number of new customers. More

CLV (Customer Lifetime Value): It’s the value of the net income that a customer is expected to generate for a company during its useful life. It is calculated by subtracting the CAC from the LTV.

COGS (Cost Of Goods Sold): These are the direct costs associated with delivering your software to customers. They include server hosting costs, third-party software licenses, staffing costs for software development, customer support services, and marketing and advertising costs associated with customer acquisition. In short, COGS is the cost of producing and delivering SaaS software to customers. More

Churn: It is the rate of customer churn during a given period. It is measured as the number of lost customers divided by the number of total customers. More

Containerization: It’s the technology that allows to package and execute an application and its dependencies in an isolated environment.

Customer Data Platform (CDP): It’s a data management platform that enables companies to collect and analyze customer data from different sources to improve the personalization of the customer experience and increase marketing effectiveness. More

Customers: These are customers who have purchased a company’s product or service. More

DAU (Daily Active Users): The number of unique users interacting with a company’s software on a given day. More

Data analysis: It’s the process of collecting, processing and analyzing data to obtain useful information for business decision making.

Data mining: It’s the process of analyzing large data sets to discover useful patterns and relationships.

DevOps: It’s a culture and set of practices that combine software development (Dev) and IT operations (Ops) to improve software delivery and maintenance.

Freemium model: A business model in which a free version of a software or service is offered with limited features, but users can upgrade to a premium version with more features at a cost.

Infrastructure as a Service (IaaS): It’s a software delivery model in which access to online IT infrastructure, such as servers and storage, is provided so that users can build and run their own applications.

Integration: It is the ability of a software or service to connect to other systems or services.

LTV (Lifetime Value): This is the amount of revenue that a customer generates for a company during his or her lifetime as a customer. It is calculated by multiplying the average revenue per customer by the number of years the customer is expected to remain with the company. More

Leads: These are potential customers who have shown interest in a company’s product or service and have provided contact information to be contacted in the future. More

MAU (Monthly Active Users): The number of unique users interacting with a company’s software in a given month. More

MRR (Monthly Recurring Revenue): It is the amount of revenue a company receives each month from its subscribing customers. It is calculated by multiplying the number of customers by the monthly subscription price. More

Market Fit: It is the capacity of a company to satisfy the needs of its target market and to offer a product or service that solves their problems or needs. More

Marketing Funnel: It is a marketing model that describes the different stages a potential customer goes through from product discovery to customer conversion. More

Microservices architecture: Es un enfoque de diseño de software en el que las aplicaciones se dividen en pequeños servicios independientes que pueden ser implementados y escalados de forma individual.

NPS (Net Promoter Score): It is a metric that measures customer satisfaction and loyalty. Customers are asked how likely they are to recommend the company to people they know on a scale of 0 to 10, and it is calculated by subtracting the percentage of detractors (who give a score of 0 to 6) from the percentage of promoters (who give a score of 9 to 10). More

One Pager: A one-page document that summarizes the most important details of a product or service, including its features, benefits and value proposition. More

Pay-per-use model: It is a business model in which customers only pay for the amount of software resources or services they actually use.

Platform as a Service (PaaS): It’s a software delivery model in which an online platform is provided for developers to build, test and run applications.

Predictive analytics: It’s the use of statistical and machine learning techniques to analyze data and make predictions about future events.

Product analytics: It’s the collection and analysis of data related to user behavior within a company’s software with the objective of improving user experience and product efficiency. More

SaaS Retention Rate: It’s the customer retention rate of a SaaS company, which measures the number of customers who renew their subscription or remain customers in a given period. It is calculated as the number of customers who remain divided by the number of customers at the beginning of the period. More

Scalability: The ability of a software or service to handle a greater volume of data or users as demand grows.

Security: It’s the ability of a software or service to protect users’ data and privacy.

Self-service: A term that refers to the ability of users to register and configure their own software or service account without the need for assistance.

Software as a Service (SaaS): It is a software delivery model in which an application is accessed over the Internet rather than installed on a device.

Subscription model: It is a business model in which customers pay a periodic fee to access the software or service.

Synchronization: It’s the process of keeping data updated in real time in different devices or systems.

Users: These are users who have created an account on a company’s software, but have not necessarily logged in or interacted with the software. More