Useful terms.
Clear definitions.
Business language, with an example and the distinction that matters. Definitions describe our editorial usage; company metric definitions may differ.
SaaS
Software as a service: software delivered as an ongoing hosted service.
Example: A team pays for access to a hosted CRM.
Keep in mind: A subscription is not proof of a monthly cancellation right.
How to evaluate SaaS pricing beyond the monthly feeCRM
Customer relationship management: the practices and software used to maintain customer records and interactions.
Example: A deal has an owner, a stage and a next action.
Keep in mind: A contact list alone may not include the full sales process.
CRM software for small businesses: three approaches to compareCAC
Customer acquisition cost: included acquisition spending divided by newly acquired customers under a stated measurement approach.
Example: A fictional $6,000 spend for 30 new customers gives $200 per customer.
Keep in mind: Cost per lead is a different metric.
How to calculate customer acquisition cost without mixing metricsLTV
Lifetime value: an estimate of value associated with a customer over the relationship, using a stated revenue or contribution definition.
Example: A model projects contribution from a cohort across future periods.
Keep in mind: Observed contribution and predicted lifetime contribution are not interchangeable.
Unit economics for startups: a plain-English guideChurn
Loss of customers or recurring revenue within a defined period and starting population.
Example: A monthly customer-churn calculation tracks customers lost from the opening cohort.
Keep in mind: Customer churn and revenue churn can move differently.
Unit economics for startups: a plain-English guideMRR
Monthly recurring revenue: a normalized monthly view of recurring revenue using a disclosed inclusion policy.
Example: An illustrative $1,200 annual subscription may be normalized to $100 per month.
Keep in mind: MRR is not necessarily cash collected or accounting revenue in that month.
Unit economics for startups: a plain-English guideARR
Annual recurring revenue: an annualized recurring-revenue measure whose definition must be stated.
Example: A stable $100 MRR can be annualized to $1,200 under a simple model.
Keep in mind: Annualization is not a guarantee of future revenue.
Unit economics for startups: a plain-English guideGross margin
Revenue less cost of goods or services sold, often expressed as a percentage of revenue.
Example: Illustrative revenue of $100 and cost of sales of $60 produces a 40% gross margin.
Keep in mind: Gross margin is not net profit; cost classifications matter.
Unit economics for startups: a plain-English guideRunway
An estimate of how long available cash can support operations under a stated net cash-use assumption.
Example: Cash divided by a stable monthly net outflow gives a simplified number of months.
Keep in mind: Changing costs and receipts can make a constant-burn estimate misleading.
Unit economics for startups: a plain-English guideWorkflow
A defined sequence of tasks, decisions and handoffs that produces an outcome.
Example: An inquiry is assigned, qualified and handed to delivery.
Keep in mind: A workflow includes exception paths as well as the normal sequence.
Business process automation: a practical small-team frameworkERP
Enterprise resource planning: software intended to coordinate several core business functions through shared records and processes.
Example: A system connects purchasing, inventory and finance.
Keep in mind: An integrated suite is not automatically the right fit for a small team.
How to choose business software for a small teamHRIS
Human resources information system: software for maintaining employee information and supporting HR processes.
Example: An employee record connects to an onboarding checklist.
Keep in mind: An HRIS does not automatically include local payroll coverage.
HR software for small businesses: records, payroll and access