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Product Metric to Revenue Mapping template
Product Strategy Alignment template
Strategic Evaluation Framework for Features
Feature Priority Strategic Scorecard
Revenue fluency is career critical for you.
Product Managers who connect their work to revenue get invited to strategy. Those who don’t stay stuck in tactics.
Executives don’t want a feature list. They want to know: How does this make us money?
Answer that, and you’re not just shipping features — you’re helping drive the business.
I get some PMs work on non-revenue initiatives — reducing COGS, digital initiatives, “internal products,” to name a few. I’ll get to those in future articles. (Spoiler: those are all tied to revenue or some form of P&L too.)
How Revenue Knowledge Shapes Better Product Decisions
Here’s how revenue fluency pays off you:
1. Connecting Product Metrics to Revenue
DAU/MAU, conversions, activations, adoption, time-to-value (TTV), NPS — they’re all proxies. You need to understand how they link to revenue.
DAU/MAU examples:
Each 1% lift in activation adds 500 retained customers per year. At $5K ARR each, that’s $2.5M ARR.
Your collaboration tool has 60% DAU. This shows it’s part of the team’s daily workflow → lower churn risk → protected ARR.
Your B2B dashboard has an MAU of 8%. At renewal, your client asks, “Why are we paying $100K for something nobody uses?” Result: churn = ARR contraction.
NPS examples:
5 of your enterprise accounts representing $1.5M ARR are scoring an NPS <20. Higher NPS doesn’t always guarantee renewal, but low NPS is a big churn red flag.
“Improving onboarding NPS by 20 points could protect ~$500K ARR by reducing churn.”
“Promoter referrals already generate 15% of new ARR — doubling that is a $3M upside.”
Conversion example:
“Clunky onboarding means only 10% of 1,000 monthly trials are converting = $100K ARR. Improve conversion to 15%, and it jumps to $150K ARR/month — a $600K annual gain.”
Usability/UI examples:
“Our reporting add-on is buried in poor UI, so users don’t discover it. The feature costs us $20K/year. Better access in dashboards helps users see its value, increasing attach rate by 10%. Across 200 accounts, that’s a $4M ARR upside.”
Sales Velocity example:
If an average deal is $100K in ARR and a more easily configurable product demo shortens the cycle by 2 weeks, sales can close an extra 5 deals per year = $500K more in bookings.
Customer Support example:
Poor usability is driving 10,000 tickets/year * $50 per ticket = $500K. Fixing it cuts tickets in half = $250K savings = equivalent of adding $250K in ARR (from a margin standpoint).
Know how to link product metrics to revenue and your product metric is transformed from just “better engagement” to money in the bank.
2. Crafting Product Strategy
Know what revenue streams matter most to the business, and you stop chasing shiny objects.
Example: If expansion ARR (customers buying more seats or add-ons) is the growth engine, focus your strategy on adoption and expansion, not just new logo acquisition.
3. Building Business Cases
Don’t just pitch a feature as “improving retention” or “improving the customer experience.” Attach a currency symbol to it.
Example: “A 3% retention lift = $1.2M in preserved ARR annually.” That’s how you win exec support.
4. Prioritizing Your Roadmap
Not every feature is equal.
Feature A: helps land new customers but only drives $200K ARR annually.
Feature B: improves retention by 5%, protecting $5M ARR.
Which one’s more valuable?
Without understanding the revenue math, you’ll guess wrong.
5. Evaluating Feature Requests
Sales wants Feature X. Customers are asking for Feature Y. Which one do you fund?
Feature X → closes 2 big deals, but little broader impact. Seems risky.
Feature Y → improves usability for all → reduces churn = compounding value.
Always weigh requests by revenue impact.
6. Assessing Trade-offs
Trade-offs are constant.
Build an integration to land one Fortune 500?
Or a self-serve onboarding that boosts SMB conversion at scale?
Revenue impact gives you the lens to decide
Not All Revenue is Equal
Most PMs think revenue is revenue. It’s not.
$1 from a one-time services project is not the same as $1 from a recurring subscription.
$1 from a customer who expands usage every quarter is not the same as $1 lost from a customer who churns after six months.
$1 from a high-margin feature is not the same as $1 that supports a renewal.
Understanding how revenue works and where it comes from impacts everything you do as a product manager:
How it shapes product decisions as in the examples above.
How you link your work to business outcomes that matter.
How you gain buy-in, credibility, and respect among stakeholders and execs.
How you talk about your work, your impact, and your value in performance reviews and job interviews.
How you’re perceived by others.
To help you, over the next several issues, I’m going to do a deep dive on revenue with practical examples of how you can use it for your product work. And I’ve packed this article full of additional learning materials, frameworks, and templates so you can apply the lessons immediately to your work (for paid subscribers).
What You’ll Learn Today:
How revenue knowledge shapes better PM decisions
Revenue concepts PMs need to master
Deep-dive into revenue metrics and how to use them for smarter product decisions
Practical examples of using revenue metrics for crafting product strategy, prioritizing roadmaps, and assessing trade-offs
The 6 core product strategies for every PM
Tools to apply these concepts and strategies to your product
Revenue Concepts You Need to Master
You don’t need to be a CFO, but you do need fluency in the basics. Each type of business has its own revenue metrics. Today, I’ll cover SaaS, and discuss others in future articles.
ARR (Annual Recurring Revenue): The heartbeat of any subscription based business. It’s what the company can count on, year after year, assuming no churn.
CARR (Contracted Annual Recurring Revenue): Like ARR, but it includes signed deals that haven’t started billing yet. Think of it as tomorrow’s ARR already in the bag.
ACV (Annual Contract Value): The average annualized revenue from a single contract. Features that unlock bigger ACVs change the economics of the business. Crucial for enterprise B2B.
TCV (Total Contract Value): The total value of a contract over its entire term, including one-time fees. Important when evaluating big-ticket enterprise features that drive upfront vs. ongoing services.
Bookings: The total value of contracts signed in a given period, regardless of when revenue is recognized. Sales leaders live on bookings.
Churn vs. Expansion: Losing customers kills growth; expanding customers compounds it. Features should fight churn and fuel expansion.
Negative Revenue Churn: When expansion revenue from existing customers outweighs revenue lost from churn. Features that drive usage and add-on adoption can fuel hyper growth.
Net Revenue Retention (NRR): Measures how much revenue you keep and expand from your existing base. If NRR > 100%, your product is fueling growth even without new customer acquisition.
ARPU (Average Revenue per User): The average revenue from each paying customer. Driving adoption of premium features or higher-tier plans drives ARPU, which drives ARR.
LTV (Lifetime Value): The total revenue a customer generates before churning. Features that make customers sticky or unlock cross-sell increase LTV — and may justify higher acquisition spend.
CAC Payback: If your feature helps lower acquisition costs or shorten payback, that’s huge.
Gross Margin: Not all revenue is profitable. Features that increase support load or infrastructure cost can erode margins.
Deferred Revenue & Remaining Performance Obligation (RPO): These tell you about committed revenue already booked, which helps you understand stability and risk of future revenue streams.
I’ll start with the basics today: ARR, ACV, and Bookings. I’ll cover the others in future issues.
Most SaaS PMs have heard of ARR and ACV, but they use them interchangeably — few understand how they actually work, let alone how to use them in their product decisions.
Let’s dive in!
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