![]() ![]() The next step is the proper accounting set up.Īccounting is one of the foundations of financial transparency in your SaaS business. BOTTOM LINE: typically, hosting and employee-related expenses.Īt this point, we know what expenses and departments should be included in our COGS.WHAT TO LOOK FOR: hosting infrastructure, third-party expenses such as royalties or embedded software costs, and R&D amortization.JOB TITLES: vary DevOps manager or engineer, release manager, systems engineer.MARGIN: DevOps/COO is included in your recurring gross margin.TYPICAL EXPENSES: wages, payroll taxes, benefits, hosting, R&D amortization, third-party software embedded in our product, training, internal use software, etc.WHAT THEY DO: maintain hosting infrastructure (i.e., AWS, Azure), customer upgrades, and hosting service level agreements (SLA’s).I also code the R&D amortization of capitalized software for-sale to dev ops. If I do have staff in R&D or my IT team handling dev ops on a regular basis, I will reclass their wages from OpEx to Dev Ops in COGS. They are usually staff on your engineering team or your internal IT team. In early-stage SaaS, you typically do not see heads dedicated to dev ops. ![]() Your dev ops team has the important job of keeping your SaaS application running. How is the department sized? ARR? Jason Lemkin has a rule of thumb of one CSM for every $2M in ARR.
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