What is SaaS Gross Merchandise Value (GMV)?

Gross Merchandise Value (GMV) is the sum of all transactions made on a platform, excluding returns, discounts, and other expenses. Essentially, it shows the entire sales volume during a given time frame. While not a primary metric for most SaaS businesses, GMV can be useful in certain situations. For example, SaaS platforms that facilitate transactions for other businesses can use GMV to track the total value of sales occurring on their platform. Monitoring GMV makes it possible to analyze performance and identify trends. Because GMV does not include costs spent during sales, it is important to remember that it does not correspond to actual income.

To calculate GMV, you can use this formula:

Gross Merchandise Value (GMV) = Number of Transactions × Average Order Value (AOV)

Gdzie:

• Number of Transactions: The total number of sales or orders during a specific period.

Average Order Value (AOV): The average revenue generated per transaction. This can be calculated by dividing total revenue by the number of transactions.

The core concept of GMV remains the same across all business models: the total value of transactions. However, GMV is not a common indicator for most SaaS companies. SaaS companies primarily focus on recurring revenue models, as shown by measures such as Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR). These KPIs more accurately reflect the subscription-based nature of SaaS companies.

Traditional GMV is often used in marketplaces and e-commerce to calculate the total value of products sold. For SaaS companies, which prioritize recurring income streams, GMV is less significant. A more realistic view of the financial success and health of a SaaS company can be obtained by concentrating on ARR and MRR.

GMV can be a useful indicator for businesses in certain situations. For example, SaaS platforms that help other businesses sell can use GMV to monitor the money produced by their users.

GMV can be used to:

• Determine growth rates
• Identify top-selling products
• Track and compare sales volume over time

It’s important to keep in mind that:

• GMV shouldn’t be the only indicator used for financial evaluation because it doesn’t take profitability or expenses into account.

MRR oraz ARR are the primary metrics for most SaaS businesses.

While GMV is not the primary metric for most SaaS businesses, it can be a helpful statistic to monitor trends in overall transaction volume and value. However, SaaS organizations should primarily use tactics that improve user experience, increase customer engagement, and optimize recurring revenue.

GMV and other important indicators can be monitored and improved with modern analytics and a diversified product offering. Though it offers useful information about the scope of business activity and aids in identifying trends for well-informed growth decisions, keep in mind that GMV is not a direct indicator of profitability.