SaaS Glossary - 100+ Startup Terms You Should Know

409A valuation

A 409A valuation is an independent appraisal of a private company's common stock, used in the US to set the exercise price of employee stock options.

ABM (Account-based marketing)

Account-based marketing focuses sales and marketing effort on a short list of target companies, treating each as its own market instead of chasing leads.

Acquihire

An acquihire is an acquisition made mainly to hire a startup's team, not to buy its product or customers. The product is often shut down afterward.

Activation rate

Activation rate is the share of new signups who reach the milestone where your product first delivers value, the point that best predicts they will stay.

ACV (Annual contract value)

ACV is the average yearly recurring value of a customer contract, found by dividing the contract's recurring value by its length in years.

ACV (Average contract value)

Average contract value is the typical deal size: total contract value divided by contracts signed. Annual contract value is a different measure.

Affiliate Marketing

A performance-based partnership that rewards others for referred purchases or actions.

Aha moment

The aha moment is the point where a new user first sees why your product is valuable to them, and the experience that most strongly predicts they will stick around.

Annualized Churn Rate

Annualized churn estimates the yearly customer loss implied by a constant monthly churn rate.

API (Application programming interface)

An API is a defined way for one piece of software to ask another for data or actions, so products can connect without exposing their internals.

API-first

API-first means you design the API as the foundation of your product before building any interface on top of it, so every client uses the same contract.

ARPA (Average revenue per account)

ARPA is the average recurring revenue per paying account, found by dividing MRR by the number of accounts. It differs from ARPU, which divides by individual users.

ARPU (Average revenue per user)

ARPU is the average recurring revenue you earn per paying user in a period, found by dividing MRR by the number of paying users.

ARR (Annual recurring revenue)

ARR is your current recurring revenue expressed as a yearly figure, usually MRR multiplied by 12. It is a run rate, not revenue earned over a year.

ARR Growth Rate

ARR growth rate measures the percentage change in annual recurring revenue over a stated interval.

ARR multiple

An ARR multiple values a SaaS company as a multiple of its annual recurring revenue. A $1M ARR business at 3x is valued at $3M.

Audit Log

An audit log records important actions and changes so administrators can understand who did what and when.

B2B SaaS

B2B SaaS is subscription software sold to businesses, not consumers. Buyers pay for a work outcome, so prices, contracts and retention look different.

B2C SaaS

B2C SaaS sells software services primarily to individuals for personal use.

Beachhead market

A beachhead market is the narrow first segment a startup chooses to win completely, then uses as a base to expand into nearby markets.

Beta Release

A beta release makes an unfinished or newly changed product available to selected users for real-world feedback.

Billboarding

Billboarding is when using a product exposes it to people who are not yet users, such as a "Sent from my iPhone" footer, so they discover it and try it.

Billing Cycle

A billing cycle is the recurring service period used to determine subscription charges and renewal timing.

Billings

Billings are the total amount you invoice customers in a period, whether or not you have earned it yet. Billings equal revenue plus the change in deferred revenue.

Blended CAC

Blended CAC is total sales and marketing spend divided by all new customers, organic and paid. Paid CAC counts only paid-channel customers and spend.

Bookings

In SaaS finance, bookings are the total value of customer contracts signed in a period, counted when the deal closes regardless of when you invoice or earn it.

Bootstrapping

Bootstrapping means building a software company from your own savings and customer revenue, without venture capital, so you keep control and ownership.

Bottom of Funnel (BOFU)

Evaluation and purchase-stage activity aimed at people close to choosing a solution.

Break-even point

The break-even point is the revenue or customer count at which your income covers all your costs, so you stop losing money.

Burn multiple

The burn multiple is net burn divided by net new ARR. It shows how many dollars you burn to add one dollar of annual recurring revenue.

Burn rate

Burn rate is how much cash your company loses each month. Gross burn is total monthly spending, and net burn is spending minus the cash coming in.

Buyer Persona

A research-based description of the person involved in choosing or buying a product.

CAC (Customer acquisition cost)

CAC is the average sales and marketing cost of winning one new paying customer. It tells you how much you can afford to spend to grow.

CAC payback period

CAC payback period is the number of months of gross profit a new customer takes to repay what you spent to acquire them. Shorter means faster cash recovery.

Cancellation flow

A cancellation flow is the sequence of screens after a customer clicks cancel, usually a reason survey followed by a pause, downgrade or discount offer.

Cap table (capitalization table)

A cap table lists every owner of a company, what securities they hold, and what percentage each owns, including options, SAFEs and convertible notes.

Category creation

Category creation means defining and owning a new market category, not competing in an existing one. Costly; most bootstrapped SaaS should skip it.

CES (Customer effort score)

Customer effort score (CES) measures how easy it was for a customer to get something done, and it predicts loyalty better than how delighted they were.

Changelog

A changelog is a dated, public list of what changed in your product. Done well, it informs customers, supports retention and gives you content to market.

Chargeback

A chargeback is when a customer's bank reverses a card payment after the customer disputes it. You lose the money and pay a fee, even if you later win.

Churned MRR

Churned MRR is the monthly recurring revenue lost in a period because customers canceled their last subscription or stopped paying.

Churn prediction

Churn prediction uses past behavior to flag accounts likely to cancel, so you can act first. It ranges from simple usage alerts to machine learning models.

Churn rate

Churn rate is the share of customers or revenue you lose in a period, usually a month. It sets the ceiling on how fast a subscription business can grow.

Click-Through Rate (CTR)

The percentage of impressions that generate a click.

CMGR (Compound monthly growth rate)

CMGR is the steady monthly growth rate that would take a metric like MRR from its starting value to its ending value over a period, with compounding.

CMRR (Committed monthly recurring revenue)

CMRR is a forward-looking version of MRR that adds signed but not yet live contracts and known upgrades, and subtracts known cancellations and downgrades.

COGS (Cost of goods sold) for SaaS

In SaaS, COGS is the direct cost of delivering and supporting your software, mainly hosting, support staff, third-party services and payment fees.

Cohort analysis

Cohort analysis groups customers by signup period and tracks each group over time, showing whether retention is improving or an average hides the truth.

Cohort Retention

Cohort retention tracks how a fixed customer group stays with a product as it ages.

Cohort Revenue Retention

Cohort revenue retention follows recurring revenue from a fixed group of customers over time.

Cold email

A cold email is a first message to someone who has never heard from you, sent to start a business conversation, usually as part of outbound sales.

Content Marketing

Using useful content to attract, educate, and help a relevant audience.

Contraction MRR

Contraction MRR is monthly recurring revenue lost when an existing customer downgrades or removes part of their plan but keeps paying.

Contribution margin

Contribution margin is revenue minus all variable costs. It shows how much each sale adds toward your fixed costs and profit.

Conversion rate

Conversion rate is the percentage of people at one step of your funnel who move to the next step, such as visitors who sign up or signups who start paying.

Conversion Rate Optimization (CRO)

Improving the share of eligible users who complete a useful desired action.

Convertible note

A convertible note is a short-term loan that converts into equity at a later funding round instead of being repaid in cash, usually with a discount or cap.

Cost per Acquisition (CPA)

Advertising spend divided by the number of tracked acquisitions or actions.

Cost per Click (CPC)

The average advertising cost paid for each click.

Cost per Lead (CPL)

The campaign cost required to acquire one new lead.

Crossing the chasm

Crossing the chasm is Geoffrey Moore's idea that a gap separates early adopters from the mainstream market, and a product must win one niche to cross it.

Cross-sell

A cross-sell offers an existing customer a different product or add-on that complements what they already pay for, adding revenue without a new customer.

CSAT (Customer satisfaction score)

CSAT is the percentage of customers who say they were satisfied with a specific interaction, product or purchase on a short rating scale, usually 1 to 5.

Customer churn

Customer churn is when a paying customer cancels or stops renewing. It is voluntary when they choose to leave and involuntary when a payment fails.

Customer concentration

Customer concentration is the share of your revenue that comes from your largest customers. A high share is a risk that lowers valuation and complicates a sale.

Customer development

Customer development is Steve Blank's method for testing a startup's business model by talking to customers before and while you build.

Customer health score

A customer health score combines usage, support, payment and engagement signals into one score showing how likely an account is to renew or churn.

Customer success

Customer success is the practice of helping customers reach the outcome they bought your software for, which drives retention, expansion and referrals.

Data Export

Data export lets customers retrieve product data in a format they can use outside the application.

DAU (Daily active users)

Daily active users (DAU) is the number of distinct users who perform a meaningful action in your product on a given day.

DAU/MAU ratio

The DAU/MAU ratio, or stickiness, is the share of your monthly active users who also use the product on a typical day.

Default alive

A startup is default alive if, at its current burn and growth, it reaches profitability before the money runs out. Otherwise it is default dead.

Deferred revenue

Deferred revenue is money a customer has paid for service you have not delivered yet. It is a liability that becomes revenue as you deliver.

Demand Generation

Activities that build awareness, understanding, and interest in solving a relevant problem.

Dilution

Dilution is the drop in an existing owner's percentage when a company issues new shares to investors, employees or others.

Dogfooding

Dogfooding means using your own product internally, as a real customer would, so your team finds its problems before customers do.

Dual funnel

A dual funnel combines a self-serve buying path for smaller SaaS accounts with a sales-assisted path for larger or more complex customers.

Due diligence

Due diligence is the investigation a buyer or investor does of a company before closing, checking the financials, customers, code, legal records and ownership.

Dunning

Dunning is the process of retrying failed subscription payments and emailing customers to update their card, so billing failures do not turn into canceled accounts.

Early adopters

Early adopters are the first customers to try a new product, tolerate its rough edges and, if it solves a real problem, tell others about it.

Earnout

An earnout is part of an acquisition price paid later, only if the business hits agreed targets such as revenue, ARR or retention after the sale.

EBITDA

EBITDA is earnings before interest, taxes, depreciation and amortization. It approximates operating profit before financing, tax and non-cash charges.

Email Marketing

Using permission-based email to educate, engage, and support a customer journey.

Entitlements

Entitlements specify which features, resources, and limits a customer is allowed to use.

Error Budget

An error budget is the amount of unreliability allowed by a service-level objective.

Exit strategy

An exit strategy is your plan for how and when you leave a business, whether by selling it, merging, passing it on or shutting it down, and what you want from it.

Expansion MRR

Expansion MRR is the extra monthly recurring revenue you earn from existing customers through upgrades, added seats, add-ons or usage growth.

Expansion revenue

Expansion revenue is the extra recurring revenue you earn from existing customers through upgrades, added seats, higher usage or add-ons.

Feature adoption

Feature adoption is the share of your active users who use a specific feature, measured over a set period, and it shows which parts of your product earn their keep.

Feature creep / Scope Creep

Feature creep is the slow growth of a product's scope as extra features pile up, until it is complicated, late and harder to sell.

Feature flag

A feature flag is a switch in your code that turns a feature on or off for some or all users without deploying new code. Also called a feature toggle.

Flat-rate pricing

Flat-rate pricing charges one fixed price for the whole product, regardless of how many users, how much usage or which features a customer needs.

Flywheel

A flywheel is a set of linked actions that reinforce each other, so steady effort builds momentum instead of relying on one big push.

Free cash flow

Free cash flow is the cash your business generates after operating costs and capital spending. It is what you actually have left to use.

Freemium

Freemium is a pricing model where a permanent free plan is offered to everyone and paid plans unlock more features, usage or support.

Free trial

A free trial gives new users full or partial access to a paid product for a limited time, with or without a credit card, before they must pay or leave.

Go-to-market strategy (GTM)

A go-to-market strategy is the plan for how you will reach your target customers, explain your value and turn them into paying users.

Grandfathering

Grandfathering lets existing customers keep their old price or plan after you raise prices or change packaging, while new customers pay the new rate.

Gross Burn Rate

Gross burn rate measures monthly cash outflows before customer collections offset them.

Gross margin

Gross margin is the share of revenue left after the direct costs of delivering your software, such as hosting and support. Most SaaS targets 70 to 80 percent.

Gross Revenue Churn

Gross revenue churn measures starting recurring revenue lost to cancellations and downgrades.

Growth channels (Traction channels)

Growth channels help you acquire customers. Explore 19 traction channels, sponsorships, and SaaS experiments to find what works for your business.

Growth hacking

Growth hacking is a data-driven way to grow a product through rapid experiments across marketing and product. Sean Ellis coined the term in 2010.

Growth loop

A growth loop is a closed system where the output of one cycle, such as new content or new users, becomes the input that brings in the next cycle.

GRR (Gross revenue retention)

Gross revenue retention is the share of recurring revenue you kept from existing customers, ignoring upgrades. It can never exceed 100%.

Horizontal SaaS

Horizontal SaaS is software that serves one function, like email, CRM or invoicing, for companies in any industry rather than for one sector.

ICP (Ideal customer profile)

An ideal customer profile describes the type of company or person who gets the most value from your product and is most likely to buy and stay.

Indie hacker

An indie hacker is an independent founder who builds and runs a profitable online business, usually solo or with a tiny team, without outside funding.

Integrations

Integrations connect a SaaS product to other systems so data or workflows can move between them.

Involuntary churn

Involuntary churn is subscription loss caused by failed payments, such as expired cards or declined charges, when the customer never decided to cancel.

JTBD (Jobs to be done)

Jobs to be done is a framework that explains why people buy by focusing on the progress they want to make, instead of on who they are or what features exist.

Keyword Research

Finding and evaluating the search queries an intended audience uses.

KPI (Key performance indicator)

A key performance indicator (KPI) is a measure you track to understand how a business, team, or process is performing against an important goal.

Land and expand

Land and expand means winning a customer with a small first purchase, then growing the account through more seats, usage or products over time.

Landing Page

A page built around a specific audience, message, and next action.

Lead Generation

Attracting potential customers and creating an identifiable path for follow-up.

Lead magnet

A lead magnet is something useful you give away, like a template or a checklist, in exchange for a visitor's email address.

Lead Nurturing

Helping potential customers progress through learning and evaluation over time.

Lead Qualification

Evaluating whether a potential customer fits the product and has a credible buying need.

Lead scoring

Lead scoring gives each lead a number based on how well they fit your ideal customer and how they behave, so you know who to contact first.

Lean startup

The lean startup method, from Eric Ries, treats a new company as a series of experiments: build, measure and learn fast to find a model that works.

Liquidation preference

Liquidation preference decides who gets paid first, and how much, when a company is sold or wound up. Preferred investors are paid before common holders.

Logo churn

Logo churn is the percentage of customer accounts you lose in a period, counted by account and not by dollar value. It is customer churn, with the big-account angle.

Low-touch sales

Low-touch sales is a short, mostly automated buying path with limited human help, between fully self-serve and high-touch enterprise selling.

LTD (Lifetime deal)

A lifetime deal sells permanent access to a SaaS product for one payment, often via AppSumo, trading future recurring revenue for cash now.

LTV:CAC ratio

The LTV:CAC ratio compares what a customer is worth over their lifetime to what it cost to win them. A ratio above 3 is the usual target.

LTV (Customer lifetime value)

Customer lifetime value estimates the gross profit a customer will generate before canceling. It compares segments well but is unreliable for young SaaS.

LVR (Lead velocity rate)

Lead velocity rate is the month-over-month growth in qualified leads. Jason Lemkin argues it predicts future revenue better than revenue itself.

Marketing Attribution

Assigning credit to marketing interactions associated with a conversion.

Marketing Funnel

A model of the stages people pass through from awareness to a chosen conversion.

MAU (Monthly active users)

Monthly active users (MAU) is the number of distinct users who perform a meaningful action in your product during a month, a broad measure of your active base.

Metered billing

Metered billing records how much of a product each customer uses during a period and bills them for that measured amount at the end of the period.

Micro-SaaS

A micro-SaaS is a small recurring-revenue software product that one person or a tiny team runs profitably in a narrow niche, usually without funding.

Middle of Funnel (MOFU)

Consideration-stage activity that helps buyers understand approaches and evaluate solutions.

MLP (Minimum lovable product)

A minimum lovable product is a small first version that solves a real problem and gives its target customers a reason to enjoy using it.

Moat

A moat is a durable competitive advantage that stops rivals from copying your product and competing away your profits, such as scale, brand or lock-in.

MoR (Merchant of record)

A merchant of record is the legal seller on a sale. It collects and remits sales tax and VAT and handles chargebacks, unlike a payment processor.

MQL (Marketing qualified lead)

An MQL is a lead that marketing judges more likely to buy than the average contact, based on fit and engagement, and ready to hand to sales.

MRR growth rate

MRR growth rate is the percentage change in monthly recurring revenue from one period to the next, most often month over month.

MRR (Monthly recurring revenue)

MRR is the predictable revenue your subscriptions produce each month, with annual and quarterly plans converted to a monthly amount and one-time fees left out.

Multi-tenancy

Multi-tenancy means one running copy of your software serves many customers at once, each with their own isolated data and settings.

MVP (Minimum viable product)

An MVP is the smallest version of a product that lets you learn whether real customers want it, built with the least effort needed to find out.

Negative churn

Net negative churn (also called negative churn) happens when expansion from existing customers exceeds revenue lost to cancellations and downgrades, so your base grows without new sales.

Net Burn Rate

Net burn rate measures the cash deficit after relevant inflows offset spending.

Net Margin

Net margin measures the percentage of revenue left as profit after all expenses.

Net new MRR

Net new MRR is the total change in monthly recurring revenue over a period: new, expansion and reactivation MRR, minus contraction and churned MRR.

Net Revenue Churn

Net revenue churn subtracts expansion from recurring revenue lost in an existing customer cohort.

Network effects

Network effects occur when a product becomes more valuable to each user as more people use it, which makes leaders hard to dislodge.

New MRR

New MRR is the monthly recurring revenue added in a period by customers who started paying for the first time.

No-code (and low-code)

No-code tools let people build apps, sites and automations with visual interfaces instead of programming. Low-code allows some custom code where needed.

North Star Metric

A North Star Metric is the single number that best captures the value customers get from your product and that your team agrees to grow above everything else.

NPS (Net Promoter Score)

Net Promoter Score (NPS) is a loyalty metric from one question, how likely you are to recommend a product, scored as the percent promoters minus percent detractors.

NRR (Net revenue retention)

Net revenue retention (NRR), also called net dollar retention (NDR), measures recurring revenue kept from the same customers, including upgrades, downgrades and cancellations.

OKR (Objectives and Key Results)

An OKR pairs a clear objective with measurable key results so a team can focus on an outcome and track progress toward it over a defined period.

Open core (business model)

Open core is a business model where a company gives away an open source core product and sells proprietary add-ons, usually team and enterprise features.

Operating margin

Operating margin is operating income as a percentage of revenue, after both COGS and operating expenses like R&D, sales and admin.

Optionality

Optionality is the ability to choose among useful future paths as circumstances change, supported by decisions that preserve room to act.

Outbound sales

Outbound sales means you start the conversation, by contacting chosen prospects through email, phone or social, instead of waiting for them to find you.

Overage (fees)

Overage fees are the extra charges a customer pays when they use more than their plan includes, such as extra API calls, contacts or storage.

Paywall

A paywall is the point in a product or site where access stops until the visitor pays, subscribes or upgrades. It can be hard, soft or metered.

Per-seat pricing

Per-seat pricing charges a fixed price for each user who has access to the product, so the bill grows as the customer adds people.

Pipeline coverage

Pipeline coverage is the value of your open sales pipeline divided by the revenue target for the period, showing whether you have enough deals to hit it.

Pivot

A pivot is a structural change to your product, customer, business model or growth strategy after you learn that your current approach is not working.

PLG (Product-led growth)

Product-led growth is a go-to-market strategy where the product itself drives acquisition, conversion and expansion, usually through self-serve signup.

PMF (Product-market fit)

Product-market fit means you have built something a real market wants badly enough that demand pulls the product along, and customers keep using and paying for it.

Positioning

Positioning defines how your product is different and better than the alternatives, for a specific set of customers who care about that difference.

Power user curve

The power user curve is a histogram of how many days per month each user is active, showing whether you have a core of heavy users, also called the L28 or L30.

PQL (Product qualified lead)

A PQL is a user or account that has used your free trial or free plan in ways that signal they are likely to pay, so sales can reach out with context.

Price anchoring

Price anchoring is showing a reference price first, like a higher plan or a cost the customer already pays, so your real price feels smaller by comparison.

Price elasticity

Price elasticity of demand measures how much demand changes when you change price: percent change in quantity divided by percent change in price.

Product Packaging

Product packaging groups features, limits, service levels, and add-ons into offers customers can buy.

Programmatic SEO

Programmatic SEO is the practice of generating many keyword-targeted pages from a template and a data set, instead of writing each page by hand.

Pro rata rights

Pro rata rights let an existing investor buy enough shares in a future round to keep their ownership percentage. It is an option, not an obligation.

Proration

Proration charges or credits a customer for only the part of a billing period they used when they upgrade, downgrade, add seats or cancel mid-cycle.

Ramen profitable

Ramen profitable means a startup earns just enough to cover the founders' modest living costs, so it no longer depends on investors to survive.

Rate Limiting

Rate limiting caps how quickly a user, tenant, or integration may make requests.

RBAC (Role-based access control)

RBAC controls what each user can do by assigning them roles, such as admin, editor or viewer, and giving each role a fixed set of permissions.

Reactivation MRR

Reactivation MRR is the monthly recurring revenue added when a customer who previously canceled returns to a paid plan.

Recurring revenue

Recurring revenue is income that repeats automatically on a schedule, usually from subscriptions, and can be predicted with reasonable confidence.

Referral Marketing

Encouraging existing users or customers to introduce relevant new customers.

Renewal Rate

Renewal rate measures the share of contracts or recurring value renewed among those due to renew.

Retention curve

A retention curve plots the share of a signup cohort still active over time. A curve that flattens is the usual sign of product-market fit.

Retention rate

Retention rate is the percentage of customers or users still with you at the end of a period. It mirrors churn rate and is best tracked by cohort.

Return on Ad Spend (ROAS)

Attributed revenue or conversion value divided by advertising spend.

Revenue-based financing

Revenue-based financing gives a company upfront capital in return for a fixed percentage of monthly revenue, until a set repayment cap is reached. No equity is sold.

Revenue churn

Revenue churn is the share of recurring revenue you lose in a period from cancellations and downgrades. Gross ignores expansion, net subtracts it.

Revenue per employee

Revenue per employee is annual revenue (or ARR) divided by headcount. It shows how much revenue each person on your team supports.

Revenue recognition

Revenue recognition is the accounting rule for when a payment becomes revenue. For subscriptions under ASC 606, it is spread over the period you deliver the service.

Reverse trial

A reverse trial starts every new signup on the paid plan for a limited time, then downgrades them to a free plan if they do not buy.

RICE prioritization

RICE ranks product ideas using Reach, Impact, Confidence and Effort. It makes estimates comparable, but its scores still depend on the quality of those estimates.

Rule of 40

The Rule of 40 says a healthy SaaS company's growth rate plus profit margin should add up to at least 40 percent.

Runway

Runway is how many months your company can keep operating before the cash runs out, at the current net burn rate.

SaaS magic number

The SaaS magic number compares new recurring revenue to the sales and marketing spend that produced it. Around 1 means you can usually spend more on growth.

SaaS quick ratio

The SaaS quick ratio divides MRR added (new plus expansion) by MRR lost (churn plus contraction). Mamoon Hamid suggests 4 or higher is healthy.

SaaS (Software as a service)

SaaS is software you rent instead of buy. Customers use it through a browser and pay a recurring fee while the vendor runs, hosts and updates it.

SAFE (Simple agreement for future equity)

A SAFE is a Y Combinator contract where an investor pays now and receives equity later, when a priced round happens. It has no interest and no maturity date.

Sales-Assisted Growth

A hybrid motion that adds human help to a product or self-service buying journey.

Sales cycle

The sales cycle is the time from a lead becoming a real opportunity to a signed deal. It grows quickly as the price of your product goes up.

Sales funnel

A sales funnel maps the stages a prospect passes through from first awareness to paying customer, narrowing at each step as people drop out.

Sales-led growth

Sales-led growth is a go-to-market model where a sales team finds, nurtures and closes customers, usually through demos, calls and negotiated contracts.

Sales Pipeline

The set of active opportunities organized by their stage in the sales process.

Sales velocity

Sales velocity is the revenue your pipeline generates per day, found by multiplying opportunities, deal size and win rate, then dividing by sales cycle length.

SAM (Serviceable addressable market)

Serviceable addressable market (SAM) is the part of your total market you can reach with your current product, pricing, geography and channels.

Sandbox environment

A sandbox is an isolated copy of your product where customers or developers can test with fake data and no real-world consequences.

SCIM (User provisioning)

SCIM is a standard that lets a customer's identity system automatically create, update and remove user accounts in your product.

SDE (Seller's discretionary earnings)

SDE is the total financial benefit one owner-operator gets from a business: profit plus owner pay and one-off costs. Small SaaS often sells on it.

SDK (Software development kit)

An SDK is a packaged set of code, tools and docs that makes it easier to build on a platform. In SaaS it usually means a client library wrapping your API.

Search Engine Optimization (SEO)

Improving a website so relevant people can discover it in organic search results.

Search Intent

The goal a person is trying to accomplish with a search query.

Seed funding

Seed funding is the first outside money a startup raises, usually from angels or small funds, to build the product and find early customers. Pre-seed comes earlier.

Self-hosted (vs cloud SaaS)

Self-hosted software runs on infrastructure the customer controls, not on the vendor's cloud. The customer installs, updates and secures it themselves.

Self-serve (self-service SaaS)

A self-serve SaaS lets customers find, try, buy and set up the product on their own, with no salesperson involved before they pay.

Series A

Series A is the first major priced venture round, raised after a startup shows product-market fit and a repeatable way to grow, usually from a VC firm.

Service-Level Indicator (SLI)

An SLI is the measured quantity used to describe a service’s reliability or performance.

Service-Level Objective (SLO)

An SLO is a measurable target for a service’s reliability or performance over a defined window.

Single-tenant (architecture)

Single-tenant means each customer gets their own dedicated instance of your software and often their own infrastructure, instead of sharing one stack.

SLA (Service level agreement)

An SLA is a contract promise about service quality, usually uptime and support response, with a stated remedy such as credits if you miss it.

SOC 2

SOC 2 is an independent auditor's report on how a company protects customer data, based on AICPA trust services criteria. B2B buyers often require it.

SQL (Sales qualified lead)

An SQL is a lead that sales has vetted and accepted as a real opportunity worth active selling time, based on need, budget and buying intent.

SSO (Single sign-on)

SSO lets a customer's employees log in to your product with their company identity provider, using SAML or OIDC, instead of a separate password.

Stair step approach

Rob Walling's path for bootstrappers. Start with a simple one-time product, repeat it until you own your time, then move to recurring-revenue SaaS.

Strategic choices

Strategic choices are commitments between worthwhile alternatives that guide the whole business, including the benefits and costs of the chosen direction.

Subscription Billing

Subscription billing manages recurring charges, invoices, payment collection, and plan changes.

Subscription business model

A subscription business charges customers a recurring fee for continued access, trading one-time sales for predictable repeat revenue.

Survivorship bias

Survivorship bias occurs when conclusions drawn from visible successes leave out the failures, making a tactic or path appear more reliable than it is.

Switching costs

Switching costs are the money, time, effort and risk a customer faces when they leave one product for another, and they protect SaaS revenue.

T2D3

T2D3 means triple, triple, double, double, double. It is a venture benchmark for SaaS growth from $2M ARR toward $144M ARR over five years.

TAM (Total addressable market)

Total addressable market is the total yearly revenue available if every potential customer for your product bought it at your price.

TCV (Total contract value)

TCV is the full value of a customer contract over its entire term, often including one-time fees. It is a sales and bookings measure, not recurring revenue.

Technical debt

Technical debt is the future cost of code shortcuts and outdated design, like a loan that charges interest as every later change takes longer.

Term sheet

A term sheet is a short, mostly non-binding document that sets out the main terms of an investment or acquisition before the full legal documents are drafted.

Tiered pricing

Tiered pricing offers a few packaged plans at different prices, each with more features or higher limits, so customers pick the one that fits their needs.

Top of Funnel (TOFU)

Awareness-stage activity that helps relevant people discover a problem, topic, or product.

Traction

Traction is measurable proof that customers want your product, such as growing revenue or retention, plus the bullseye method for finding your channel.

Trial conversion rate

Trial conversion rate is the percentage of free trial users who become paying customers, and it depends heavily on whether your trial asks for a credit card.

TTV (Time to value)

Time to value is how long it takes a new customer to get their first real benefit from your product, measured from signup or purchase to that first outcome.

Unit economics

Unit economics measures the revenue and costs of a single unit, usually one customer, to show whether each sale makes or loses money.

Upsell

An upsell persuades an existing customer to buy more of what they already use, such as a higher plan, extra seats or a larger usage tier.

Uptime

Uptime is the percentage of time your service is available and working. 99.9% uptime allows about 8.8 hours of downtime a year.

Usage-based pricing

Usage-based pricing charges customers for what they actually consume, such as API calls, messages or gigabytes, instead of a fixed price per seat or plan.

User-generated content (UGC)

User-generated content is anything your users create inside or around your product, like templates or public pages, that other people discover and use.

User onboarding

User onboarding is everything you do to help a new user get from signup to their first real result in your product, so they keep using it.

USP (Unique selling proposition)

A USP is the specific benefit you offer that competitors do not, stated clearly enough that the right customer picks you over the alternatives.

Value-based pricing

Value-based pricing sets your price from what the product is worth to the customer, not from your costs or what competitors charge.

Value metric

A value metric is the unit you charge for, such as seats, contacts or API calls, chosen because it rises as customers get more value from your product.

Value Proposition

A clear statement of the useful outcome a customer can expect from a product.

Vendor lock-in

Vendor lock-in is when switching away from a supplier is so costly or risky that customers stay, even if they would prefer to leave.

Venture capital

Venture capital is money from funds that buy equity in young companies expecting a few huge winners to pay for the many that fail.

Vertical SaaS

Vertical SaaS is software built for one industry, such as dental clinics or construction firms, shaped around how that industry works.

Vesting

Vesting is how equity is earned over time. A common schedule is four years with a one-year cliff, so nothing vests until the first anniversary.

Viral coefficient (K-factor)

The viral coefficient, or K-factor, is the average number of new users each existing user brings in. Above 1, growth feeds itself.

Viral Loop

A repeatable process in which existing users help attract users who can repeat the process.

Voluntary Churn

Voluntary churn happens when a customer intentionally cancels or decides not to renew.

Webhook

A webhook is an HTTP request your software sends to a customer's URL when an event happens, so they get told instead of having to keep checking.

Weekly Active Users (WAU)

WAU counts distinct users with qualifying activity in a defined weekly window.

White label (software)

White-label software is built by one company and rebranded by another, which sells it as its own while the original vendor stays invisible.

Willingness to pay

Willingness to pay is the most a customer will pay for your product. Estimate it with interviews, Van Westendorp, conjoint analysis and price tests.

Win-back campaign

A win-back campaign is a short series of messages sent to customers who canceled, inviting them to come back, usually timed to their reason for leaving.

Win rate

Win rate is the percentage of sales opportunities that end in a closed-won deal, a direct measure of how well you qualify, pitch and close.