Average Cost of Service - ACS

Average Cost of Service (ACS) is another important SaaS metric for finance to track and to educate the company about.  When used in isolation, it doesn’t tell us much.  When used in combination with annual recurring revenue (ARR) and customer acquisition costs (CAC) to name a few, it is very powerful.  It can help answer questions about pricing effectiveness, margins, and payback.
 
Once you have ACS, you can run scenarios to determine how your variable and unit costs will change when you add more customers to your cost structure.

ACS =  recurring service expenses / sum of all current customers maintained using such services

The recurring cost of all engineering, support, account management, sucomer service and billing activities plus all physical infrastructure and systems required to maintain a customer, including loaded labor costs.