Product Relationship: This Knowledge Article addresses functionality available in Sales with Revenue.

The following are Software as a Service (SaaS) Metrics that TekStack can offer, measuring Key Performance Indicators (KPIs) such as:

1. Profitability

• Customer Lifetime Value (LTV) – on Health tab for Account for each customer

2. Retention and Efficiency

• SaaS (Customer) Churn Rate – in the Subscription Dashboard, customers lost
• Lifetime Value (LTV) – on Health tab
• Monthly Recurring Revenue - in the Subscription Dashboard
• Revenue Churn – in Subscription dashboard based on lost revenue

3. Growth

• Net Promoter Score (NPS)

Summary of TekStack Metrics

Here is a list of the metrics and their calculation seen in the Sales area of TekStack.

1. Lifetime Revenue
2. Total Contract Value (TCV)
   1. Opportunity Line
   2. Order Line
3. Annual Recurring Revenue (ARR)
   1. Account
   2. Order Line
   3. Opportunity Line
4. Gross Margin
5. Price per Unit
6. Lifetime Value
7. Monthly Price
8. Monthly Price with Discounts

Examples:

1. Lifetime Revenue

The Lifetime Revenue calculation is the sum of recognized revenue to date for all products.

Why? So that you know what this customer is worth to your business over the customer lifetime.

In the customer account record, go to the Health tab and see the Lifetime Revenue as shown. This is the total of all revenue that is recognized to date from a single customer.

You can verify this by going to the Revenue area. Under Revenue, you will see a list of Actual Revenue (the default) received from all customers. Filter the list by account name. One easy way to determine account lifetime revenue is to export the data to a spreadsheet. Click the Export icon in the ribbon on the grid.

This creates a spreadsheet where you can sort by the date, and then highlight the revenue earned until the present. This will confirm the Lifetime Revenue total you see in the Health tab.

See the Sum of the highlighted cells in the spreadsheet footer of the page.

Here’s another example with several products.

This is all the revenue that has been recognized for all products over the lifetime of the customer relationship. This field appears on the Health tab. It is calculated from the revenue records from each product or subscription. It included Actual Revenue and not Lost Revenue.

Products

There are three products listed under Subscriptions in this account.

Product Revenues

See the revenues recognized from each product.

Product Recognized Revenue Totals

1.	CyberRisk (1 Year)	$6,933.33
2.	Endpoint Manager	$12,000.00
3.	Customer Relationship Management	$10,000.08
	Total	28,933.41

Health Tab

Return to Summary

2. Total Contract Value (TCV)

The Total Contract Value can be seen in a couple of places in TekStack.

1. Opportunity line (General tab)

Why? So that you can see what the total of both recurring, or subscription, revenue plus the non-recurring revenue will be for this opportunity.

From the Opportunity, click Products and then click the product you are interested in. It opens in the Opportunity Line.

2. Order (General tab)

TCV will calculate multi-year value, i.e., the value for the total contract over the life of the subscription or product.

Why? So that you can see value of what you sold over a period of time.

From the Opportunity Summary tab, click the Order number. It opens the Order.

Return to Summary

3. Annual Recurring Revenue

The Annual Recurring Revenue (ARR) can be viewed in three different places in TekStack.

1. Total ARR

Why? So that you know what this customer is worth to your business annually.

In the Subscription tab of the account, the list of all subscriptions is totaled. The formula is the Sum of all subscriptions = Total Account ARR.

This total is shown on the Health tab of the account.

2. Product ARR

Why? So that you can see how this product will affect this customer’s annual recurring revenue. You can see it also in the list of subscriptions shown above.

On the Subscription tab, click the product for which you want to see the ARR. The Order Line opens showing its details. Open the Pricing Details tab. See the formula information explained next.

On the Pricing Details tab you can see the Quantity and the Price per Unit. This gives you the Total Contract Value (TCV). Quantity x Price per Unit = TCV.

To calculate the ARR, you must start with the Total Contract Value (TCV). The formula is Quantity x Price per unit = TCV. The calculation for ARR is dependent on the unit of the product. The ARR for a one-year subscription is the value of the TCV. However, as soon as the unit changes, the ARR will change. Calculations are based on a 12-month year.

Here are some examples:

Quantity	Price per Unit	Unit of subscription	TCV	ARR	Calculation
10	25	1 year	250	250	250/12 x 12 = 250
10	25	3 year	750	250	750/36 x 12 = 250
10	25	5 year	1250	250	1250/60 x 12 = 250
10	25	3 month	250	1000	250/3 x 12 = 1000
10	25	5 month	250	600	250/5 x 12 = 600
10	25	6 month	250	500	250/6 x 12 = 500

 

3. Opportunity ARR

Why? So that you can see what the product on this opportunity will add the customer ARR.

To see the Opportunity Line, go to the Opportunity record and click the Products tab. Click the Product to open the Opportunity Line.

As explained previously, the formula is Quantity x Price per unit = TCV divided by the number of months of the product unit x 12 (number of months in one year). In the example above:

5 x 5,000 = 25,000/36 x 12 = 8,333.33

Return to Summary

4. Gross Margin

Gross Margin is an important metric for business. It is the profit you made after you subtract the cost of your product or service.

1. Calculating Gross Margin

Cross Margin can only be calculated once a Unit Cost is added to the Product record. Unit cost is entered in the Configure area.

Why? So that you know what your Gross Margins are when you are setting up your product prices.

1. In Configure, go to Sales on the left navigation and then select Products. A list of products opens.
2. Click the Product for which you want to add or verify the cost.
3. Under the Prices tab, a list of products with units and prices appears. Click the product you’re interested in. The product price form opens.
4. Under the General tab, you will see the Price Type, Price List, Product name, Unit and Unit Price, Monthly Price, Unit Cost and Gross Margin.

See how the system calculates the numbers for you in the Product Price form.

Why? So that you can see how the unit cost is affected by the change in Gross Margin.

5. Add the Unit Cost and the system calculates the Gross Margin.

6. Enter the Gross Margin and the system calculates the Unit Price based on the entered Unit Cost.

Where can you see Gross Margin?

1. Opportunity > Summary Tab

Why? So that you can see what your Gross Margin, including after product discounts, will be on an Opportunity when you set it up.

2. Opportunity Line

(Price per unit – Discount per unit – cost per unit / price per unit – discount per unit = Gross Margin)
e.g. (1000-100-200)/(1000-100) = 77.8%

3. Order Line

From the Opportunity>Summary tab, click the Order. In the Product and Services tab, click the Product. The Order Line opens.

Return to Summary

5. Price per Unit or Unit Price

This is set up in Configure area and is used to calculate ARR, TCV and Gross Margin.

In Configure, under the Sales section, click Product. To set up a new product, click the + icon.

The new product must be associated with a Price List which will determine the currency. Then Assign a Unit, and a Unit Price.

To edit a product price, from the Product list, click the product you want to change. Then click the Prices tab.

Return to Summary

6. Lifetime value

The Lifetime Value incorporates all historic value of the product. It is not shown anywhere else.

Why? It incorporates the historic value for the entire lifetime of the product.

The field shows the total contract value of a product over lifetime of subscription. It is calculated per product only and displayed in Pricing Details tab on the Order Line.

Return to Summary

7. Monthly Price (Unit Price / 12)

1. Product Price

1. In the Configure area, in the Sales section, click Product.
2. Click the + icon to add a new product. Once you choose the unit and enter the price, the monthly price is calculated automatically.

2. Opportunity Line

It’s also calculated and displayed on product information in the opportunity line. Quantity is not considered for monthly price.

Why? So that you can see what the monthly price is on an opportunity. You’ll also see the Monthly Recurring Revenue (MRR) from this form.

From the Account form, click the Opportunity, then click the Products tab. Click the product to open the Opportunity Line.

Why? So that you can see what the monthly price will be when setting up a price for a subscription.

Return to Summary

8. Monthly Price with Discounts (Price per unit – discount / 12)

The Price per unit can be added at Opportunity Line. Add a dollar ($) discount and the system calculates the discount percentage (%) per unit. Add a percentage (%) discount and the systems calculates the dollar ($) discount per unit.

Why? So that you can see how dollar and percentage discounts affect the price as well as for the ARR, MRR, and the TCV.

1. No discount for price per unit

Note: initial values for ARR, MRR, TCV

2. Add a Discount per Unit

Note: Change in values of ARR, MRR and TCV

3. Add a Discount % per Unit

Note: Change in values of ARR, MRR and TCV

Return to Summary