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Typically, startup founders and executives must meet with their board of directors each quarter to review the progress of the company. They may talk about broad topics such as total costs and total revenue, and use these numbers as a guide to determine which moves the company should make in the near future. Often missing from the conversation, however, is a clear and detailed discussion of SaaS metrics.

It can be a challenge to measure costs within a SaaS company. While a business with physical inventory can count the number of items sitting on the shelf and the money needed to create, store, and ship those items, operating within the cloud means SaaS companies have to measure their costs through a layer of abstraction. The number of users a given product supports and the resources needed to keep that product up and running could change by the minute.

At CloudZero, the thing we do better than any other cost solution is connect the dots between cloud cost and your businesses. While other solutions offer reporting and dashboards that answer, “How much did we spend?”, CloudZero also enables you to answer “Why?”. Was it because you onboarded a new customer? Did your team push new code? Or did usage of a feature tick up after some clever UX adjustments?

Identifying great business optimization opportunities is tougher than it seems. You often need to weigh the projected revenue and costs of taking a new path against the potential opportunity costs of not taking that path. Not only is this an apples-to-oranges comparison, but also a “what if” scenario riddled with variables. For instance, what if slashing costs makes the customer experience so much slower and more frustrating that sales decline and you wind up losing revenue?

Microsoft's Azure and Amazon Web Services (AWS) are the two most popular cloud providers today. They both offer a variety of Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) solutions. In addition, you'll find products covering multiple computing areas, such as compute, storage, analytics, and networking. You can also deploy AWS or Azure services in the cloud, on-premises, or as a hybrid setup.

SaaS companies are known for their strong margins. With gross margins typically in the 60-90% range, even SaaS companies with comparatively weaker margins have a compelling business model when compared with most other industries. Nonetheless, even a few percentage points of margin can have a huge impact on a company’s valuation and overall success. This chart, taken from a great article by Villi Iltche at Two Sigma Ventures, shows the correlation between gross margins and valuation.

Amazon Elastic Kubernetes Service (EKS) eases deploying and running Kubernetes on the AWS platform. A fully managed Kubernetes service, EKS eliminates the need to install, configure, or maintain Kubernetes nodes or control planes on your own. With EKS, you can leverage the performance, scalability, and availability of AWS infrastructure, along with integrations with multiple AWS compute, storage, security, serverless, and networking services.

Whether you’re new to Kubernetes or a bona fide wizard, it may seem like getting any meaningful cost data out of it is a miracle. This is because many organizations that migrate to Kubernetes unwittingly step into the Black Box of Kubernetes Spend. In pre-Kubernetes life, teams could allocate costs by tagging resources.

Business leaders frequently need to make decisions that could impact the entire future of a company. Armed with pages of data and financial reports, many executives choose to slash costs, double efforts on certain products over others, or otherwise forge ahead with major decisions about cloud usage, spending, and overall business strategy. Great choices could mean huge profits, but unwise choices could spell doom for the business as a whole.