How To Calculate Cost of Annual Recurring Revenue in Deltek | Arithmix

Calculating the cost of annual recurring revenue (ARR) is an important process for any business that offers subscription-based services. ARR is the amount of revenue that a company can expect to receive from its customers on an annual basis. It is a key metric for measuring the financial health of a business and is often used by investors to evaluate the potential of a company.

What Is Cost of Annual Recurring Revenue?

The cost of ARR is the amount of money that a business spends to acquire and retain customers who generate recurring revenue. This includes the cost of sales and marketing efforts, as well as the cost of providing customer support and maintaining the product or service. By calculating the cost of ARR, businesses can determine the profitability of their subscription-based services and identify areas where they can improve efficiency and reduce costs.

For example, if a company spends $100,000 on sales and marketing efforts to acquire 100 new customers who generate $50,000 in ARR, the cost of ARR would be $2,000 per customer. This means that it costs the company $2,000 to generate $500 in annual revenue from each customer.

When Is It Valuable To Calculate Cost of Annual Recurring Revenue?

Calculating the cost of ARR is valuable for businesses of all sizes, but it is particularly important for startups and small businesses that are looking to grow their subscription-based services. By understanding the cost of acquiring and retaining customers, these businesses can make informed decisions about how to allocate their resources and optimize their sales and marketing efforts.

Additionally, calculating the cost of ARR can help businesses identify areas where they can improve customer retention and reduce churn. By analyzing customer behavior and feedback, businesses can identify pain points and make changes to their product or service that will improve customer satisfaction and loyalty.

Overall, calculating the cost of ARR is an essential process for any business that offers subscription-based services. By understanding the cost of acquiring and retaining customers, businesses can make informed decisions about how to optimize their sales and marketing efforts, improve customer retention, and ultimately increase profitability.

How Do You Calculate Cost of Annual Recurring Revenue in Deltek

Deltek itself isn’t naturally geared towards letting you calculate complex metrics like Cost of Annual Recurring Revenue. As an alternative, teams typically use products like Arithmix to import data from Deltek 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 Deltek, combine it with data from other systems, and create calculations like Cost of Annual Recurring Revenue.

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 Cost of Annual Recurring Revenue in Arithmix

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

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