How To Calculate ARR Cohort Analysis in Sage 50 | Arithmix

If you're looking for a way to analyze your company's revenue trends, you may want to consider calculating ARR cohort analysis. This type of analysis can help you identify patterns in your customer base and track how much revenue they generate over time. In this article, we'll explain what ARR cohort analysis is, when it's valuable to calculate, and how you can do it using Sage 50.

What Is ARR Cohort Analysis?

ARR stands for Annual Recurring Revenue, which is the amount of revenue that a company expects to receive on an annual basis from its customers. Cohort analysis, on the other hand, is a way of grouping customers based on common characteristics, such as the month they signed up or the product they purchased.

ARR cohort analysis combines these two concepts to help companies understand how much revenue they can expect to receive from each cohort of customers over time. By tracking the revenue generated by each cohort, companies can identify trends and make informed decisions about how to allocate resources.

When Is It Valuable To Calculate ARR Cohort Analysis?

ARR cohort analysis can be valuable for any company that relies on recurring revenue from customers. This includes subscription-based businesses, software-as-a-service (SaaS) companies, and any other business that charges customers on a recurring basis.

By calculating ARR cohort analysis, companies can identify which cohorts of customers are generating the most revenue, which are growing the fastest, and which may need additional attention to prevent churn. This information can be used to inform marketing and sales strategies, as well as product development decisions.

How to Calculate ARR Cohort Analysis in Sage 50

To calculate ARR cohort analysis in Sage 50, you'll need to follow these steps:

1. Identify the cohorts you want to analyze. This could be based on the month the customer signed up, the product they purchased, or any other characteristic that's relevant to your business.
2. Calculate the ARR for each cohort. To do this, add up the total revenue generated by each cohort over the past year and divide by the number of customers in that cohort.
3. Plot the ARR for each cohort over time. You can use a line graph to visualize the trends and identify any patterns or anomalies.
4. Analyze the data to identify trends and make informed decisions about how to allocate resources.

By following these steps, you can gain valuable insights into your company's revenue trends and make informed decisions about how to grow your business.

How Do You Calculate ARR Cohort Analysis in Sage 50

Sage 50 itself isn’t naturally geared towards letting you calculate complex metrics like ARR Cohort Analysis. As an alternative, teams typically use products like Arithmix to import data from Sage 50 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 Sage 50, combine it with data from other systems, and create calculations like ARR Cohort Analysis.

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 ARR Cohort Analysis in Arithmix

Calculating metrics like ARR Cohort Analysis is simple in Arithmix. Once you've created your free account, you’ll be able to import your Sage 50 data, and use it to create natural language formulas for metrics like ARR Cohort Analysis.

Arithmix is designed to give you the power to build any calculations you want on top of your Sage 50 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.