Base Net Burn is a metric SaaS companies use to gain insights into their Net Burn minus the Customer Acquisition Costs (CAC). It is an important metric to judge the profitability of a business.
To calculate Base Net Burn, you need to deduct Customer Acquisition Costs from the Net Burn. For example, if a business has a Net Burn of $400,000 per month and is spending $450,000 per month on variable customer acquisition costs, it will have a Base Net Burn of -$50,000 per month. The business can reduce the variable marketing costs to turn profitable.
(Monthly Revenue – Cost of Goods Sold) – Gross Burn Rate = Net Burn Rate.
ƒ Sum(Net Burn) – Sum(CAC)
The benchmark for an acceptable Base Net Burn is one-twelfth of available cash. Businesses with $300,000 in cash must aim at a base net burn rate close to $25,000.
Customer Acquisition Cost
It offers businesses insight into reducing the Burn by lowering the variable customer acquisition costs.
Apdex score is a metric that businesses use to measure user satisfaction with an application's response time. It ranges from 0 to 1, with 1 indicating all requests were satisfied. A score of 0 indicates that all requests were frustrating.