How To Calculate Annual Revenue per Account in Freshbooks | Arithmix

Calculating annual revenue per account is a crucial metric for any business, as it helps you understand the value of each customer to your bottom line. This metric is particularly important for subscription-based businesses, where the lifetime value of a customer is a key factor in determining the success of the business. In this article, we'll explore what annual revenue per account is, why it's valuable to calculate, and how to calculate it using Freshbooks.

What Is Annual Revenue per Account?

Annual revenue per account is a metric that tells you how much revenue you generate from each customer on an annual basis. It's calculated by dividing your total annual revenue by the number of accounts you have. For example, if you have 100 accounts and generate $1 million in annual revenue, your annual revenue per account would be $10,000.

This metric is particularly useful for subscription-based businesses, as it helps you understand the lifetime value of a customer. By knowing how much revenue you generate from each customer on an annual basis, you can make better decisions about how much to spend on customer acquisition and retention.

When Is It Valuable To Calculate Annual Revenue per Account?

Calculating annual revenue per account is valuable for any business, but it's particularly important for subscription-based businesses. If you're running a subscription-based business, you need to know how much revenue you generate from each customer on an annual basis in order to make informed decisions about pricing, customer acquisition, and retention.

For example, if you know that your annual revenue per account is $10,000, you can use that information to determine how much you can afford to spend on customer acquisition. If it costs you $5,000 to acquire a new customer, but that customer generates $10,000 in annual revenue, then acquiring that customer is a good investment.

How to Calculate Annual Revenue per Account in Freshbooks

Calculating annual revenue per account in Freshbooks is easy. Simply follow these steps:

1. Log in to your Freshbooks account.
2. Click on the "Reports" tab.
3. Select "Revenue by Client" from the list of reports.
4. Select the date range for which you want to calculate annual revenue per account.
5. Divide the total revenue by the number of accounts to get your annual revenue per account.

It's important to note that this calculation assumes that each account generates the same amount of revenue. If you have accounts that generate significantly more or less revenue than others, you may want to calculate annual revenue per account for each segment of your customer base separately.

By calculating annual revenue per account in Freshbooks, you can gain valuable insights into the value of each customer to your business. Use this metric to make informed decisions about pricing, customer acquisition, and retention, and watch your business thrive.

How Do You Calculate Annual Revenue per Account in Freshbooks

Freshbooks itself isn’t naturally geared towards letting you calculate complex metrics like Annual Revenue per Account. As an alternative, teams typically use products like Arithmix to import data from Freshbooks and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Freshbooks, combine it with data from other systems, and create calculations like Annual Revenue per Account.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Annual Revenue per Account in Arithmix

Calculating metrics like Annual Revenue per Account is simple in Arithmix. Once you've created your free account, you’ll be able to import your Freshbooks data, and use it to create natural language formulas for metrics like Annual Revenue per Account.

Arithmix is designed to give you the power to build any calculations you want on top of your Freshbooks data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.