Average Cost of Service (ACS) shows how much the company spends on delivering its services to one customer on average. It is an important SaaS financial metric that helps evaluate the company's financial performance, especially in combination with annual recurring revenue (ARR) and customer acquisition costs (CAC) financial metrics. With the help of Average Cost of Service (ACS) company's managers can effectively manage pricing policies, financial margins, and payback periods. According to the general rule, ACS should be bigger than ARR. At the same time, some additional facts may impact the ACS metric of your company.
Average Cost of Service Calculator
ACS captures costs that gross margin calculation may ignore
If you ignore such costs, you may over-estimate the profitability of your company
More accurate profitability calculation helps to avoid cash shortage problems
ACS calculation shows the change in the profitability margins when the company scales
