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Well cost of sale in SaaS can be fixed (salary) and variable (compensation + marketing). I'm referring more to companies that have an "Enterprise" tier, or rath

by mbesto 13y ago

Well cost of sale in SaaS can be fixed (salary) and variable (compensation + marketing). I'm referring more to companies that have an "Enterprise" tier, or rather at least require Account Executives that are a must to drive sales with higher profile clients. Any company that does make serious money (that would be worth valuing) would IMHO warrant this type of structure (Basecamp and a few others being the rare exceptions to this rule). > If variable costs approached those of manufacturing in software companies, you'd have to take a hard look at the management and consider replacing them quickly. =) Having looked at various large SaaS companies (SF, Workday, etc) the variable costs appear to be quite high.

drone 13y ago
> Having looked at various large SaaS companies (SF, Workday, etc) the variable costs appear to be quite high. Yeah, I've seen some of that too, but I still think that outside of certain specialized markets and products, that the variable costs shouldn't approach 60%+ on the LTV of a sale. I would also tend to calculate commissions and one-time marketing expenses not only against the first month or payment period, but on the total LTV of the sale.