What is the ROSE Metric
I would like to introduce a new SaaS metric that goes deeper than revenue per FTE. This new SaaS metric is the Return on SaaS Employees, or the ROSE metric.
This metric is not meant to reduce your workforce to improve your organizational efficiency.
It is intended to highlight the tradeoffs between headcount, recurring revenue, and EBITDA growth. And when budgeting season approaches, I want us all in SaaS to take a hard look at the investment that we are making back into our people. People are our competitive advantage in SaaS.
How to Calculate the ROSE Metric
To calculate the ROSE metric, divide your recurring revenue by employee related expenses. This returns $X number of recurring revenue dollars generated for every one dollar of employee expense (i.e. investment). I use trailing twelve month numbers in the calculation.
Download
Download the ROSE Metric slides below.
Additional SaaS Resources
Check out this detailed post on the ROSE Metric at The SaaS CFO.