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Life Cycle Renewal Rate in SaaS

 

Life Cycle Renewal Rate


The Life Cycle Renewal Rate Curve is the plot of the renewal rates throughout the customer contract life cycle for a like group of contracts.

Most frequently, the like group is a “class of” group, meaning sold in the same time period or in the same relative term. as seen below.

lifecycle_renewal_rate.png

Note how the renewal rate/churn varies from Term number to Term number.

Each SaaS or subscription business may have a unique lifecycle renewal rate curve. It is important to understand such curves as they can have dramatic affects on pricing, packaging, compensation and other operations decisions, and can have a massive impact on forecasting.
 
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