SaaS Knowledge 2 — Questions and Answers
Question 1: Which pricing model charges customers based on the number of API calls or data processed?
- Flat-rate pricing
- Usage-based pricing (Correct answer)
- Per-seat pricing
- Freemium pricing
Correct answer: Usage-based pricing
Usage-based pricing (also called pay-as-you-go) charges customers proportionally to how much they consume the service.
Question 2: What does 'product-led growth' (PLG) mean in a SaaS context?
- Marketing drives all new signups
- The product itself is the primary acquisition and conversion channel (Correct answer)
- Sales teams demo the product to every prospect
- Pricing is set by the product team
Correct answer: The product itself is the primary acquisition and conversion channel
PLG is a go-to-market strategy where the product drives user acquisition, expansion, and retention without relying primarily on sales or marketing.
Question 3: What is a 'SaaS quick ratio' used to measure?
- Cash on hand divided by monthly burn
- New MRR plus expansion MRR divided by churned plus contracted MRR (Correct answer)
- Customer acquisition cost divided by LTV
- Gross margin minus operating expenses
Correct answer: New MRR plus expansion MRR divided by churned plus contracted MRR
The SaaS quick ratio measures growth efficiency by comparing new revenue gains to revenue losses in the same period.
Question 4: In SaaS, what is 'negative churn'?
- Having zero customer cancellations in a month
- Expansion revenue from existing customers exceeds revenue lost from churn (Correct answer)
- Acquiring new customers faster than you lose old ones
- A refund rate below 1%
Correct answer: Expansion revenue from existing customers exceeds revenue lost from churn
Negative churn occurs when upsells and expansions from existing customers outpace cancellations, causing net MRR to grow even without new customers.
Question 5: What is the primary purpose of an SLA (Service Level Agreement) in SaaS?
- To define the software's feature roadmap
- To legally commit to uptime, performance, and support response standards (Correct answer)
- To outline the vendor's pricing tiers
- To describe data migration procedures
Correct answer: To legally commit to uptime, performance, and support response standards
An SLA formalizes the service quality commitments a SaaS provider makes to customers, including uptime guarantees and remedies for non-compliance.
Question 6: What does 'multi-tenancy' mean in SaaS architecture?
- Multiple data centers host the same application
- Multiple customers share the same infrastructure while their data remains isolated (Correct answer)
- Each customer gets a dedicated server instance
- The application supports multiple programming languages
Correct answer: Multiple customers share the same infrastructure while their data remains isolated
Multi-tenancy allows a single software instance to serve multiple customers simultaneously, with logical separation keeping each tenant's data private.
Question 7: Which metric best measures how quickly a SaaS company recoups its customer acquisition cost?
- Churn rate
- CAC payback period (Correct answer)
- Net Promoter Score
- Monthly active users
Correct answer: CAC payback period
The CAC payback period measures how many months of customer revenue are needed to recover the cost of acquiring that customer.
SaaS Knowledge 2
Which pricing model charges customers based on the number of API calls or data processed?