Glossary/Marketing Finance

• Acquisition MER (aMER)

  Revenue from new customers divided by total marketing spend, isolating how efficiently spend drives first-time purchases.

• Break-Even ROAS

  The minimum return on ad spend needed to cover product and variable costs, calculated as one divided by contribution margin percentage.

• Burn Multiple

  Net cash burned divided by net new annual recurring revenue in a period; lower means more capital-efficient growth.

• Burn Rate

  The rate at which a company spends cash beyond what it brings in, usually stated per month.

• Cash Conversion Cycle

  The days between paying for inventory and collecting cash from customers, showing how long cash is tied up in operations.

• Contribution Profit

  The dollars left after subtracting product, fulfillment, transaction, and marketing costs from revenue, available to cover fixed costs.

• Cost of Goods Sold (COGS)

  The direct costs of producing or buying the goods a company sells, such as materials, manufacturing, and inbound freight.

• EBITDA

  Earnings before interest, taxes, depreciation, and amortization, a common proxy for a company's operating profitability.

• First-Order Profitability

  Whether a customer's first purchase covers its product, fulfillment, and acquisition costs, determining how much brands rely on repeat orders.

• Fixed vs. Variable Costs

  Fixed costs, like rent and salaries, stay constant with volume; variable costs, like shipping and payment fees, rise with each sale.

• Free Cash Flow

  Cash a business generates from operations after capital expenditures, available for growth, debt repayment, or shareholders.

• Fully Loaded CAC

  Customer acquisition cost including all sales and marketing expenses, such as salaries, tools, agencies, and overhead, not just media spend.

• Gross Margin

  Revenue minus cost of goods sold, expressed as a percentage of revenue, showing profit before operating expenses.

• Gross vs. Net Revenue

  Gross revenue is total sales before deductions; net revenue subtracts returns, discounts, and allowances.

• Logo Churn

  The percentage of customer accounts lost in a period, counted regardless of how much revenue each represented.

• Magic Number

  A SaaS efficiency metric: quarterly increase in recurring revenue, annualized, divided by the prior quarter's sales and marketing spend.

• Marketing Budget as % of Revenue

  Total marketing spend expressed as a share of company revenue, a common benchmark for setting and comparing marketing investment.

• Negative Churn

  When expansion revenue from existing customers exceeds revenue lost to churn and downgrades, so the existing base grows on its own.

• New Customer CAC (nCAC)

  Total marketing spend divided by first-time customers only, a common DTC metric that excludes repeat buyers from the denominator.

• Non-Working Media

  Marketing spend that doesn't directly buy audience exposure, such as creative production, agency fees, ad tech, and research.

• Operating Expenses vs. Capital Expenditures (OPEX vs. CAPEX)

  OPEX is day-to-day spending expensed immediately, like most marketing; CAPEX buys long-lived assets, such as some software development, capitalized and depreciated over time.

• Paid CAC

  Paid media spend divided by customers acquired through paid channels, excluding organic and referral customers.

• Revenue Churn

  The percentage of recurring revenue lost from cancellations and downgrades in a period.

• Rule of 40

  A SaaS benchmark stating that revenue growth rate plus profit margin, often EBITDA or free cash flow margin, should be at least 40%.

• Runway

  How many months a company can keep operating before running out of cash, calculated as cash on hand divided by monthly net burn.

• SaaS Quick Ratio

  New plus expansion MRR divided by churned plus contraction MRR, measuring how efficiently a subscription business grows.

• Voluntary Churn

  Customers who actively choose to cancel a subscription or stop buying.

• Zero-Based Budgeting

  Building each budget from zero every period, justifying every expense, rather than adjusting the previous year's figures.