How to use this glossary

Maker posts are full of shorthand. Someone announces "$2k MRR, 4% churn, CAC basically zero" and expects you to know what that means and why it matters. This page defines the terms you will see most often in the catalog and in the posts it links to.

Definitions are grouped loosely by topic. Where a term has a common misunderstanding, it is called out. Worked examples use made-up numbers to show the arithmetic; they are not claims about typical results.

Revenue and money

MRR (Monthly Recurring Revenue). The predictable subscription revenue a product earns in a month, normalized to a monthly figure. If you have 40 customers paying $12 a month, your MRR is $480. Annual plans are divided by twelve: a $120 yearly plan contributes $10 of MRR. One-off payments, setup fees and refunds-in-waiting are not part of MRR. See What MRR Really Means for the traps.

ARR (Annual Recurring Revenue). MRR multiplied by twelve. It is a run-rate, not a statement of what you earned last year. A product with $480 MRR has an ARR of $5,760, even if it launched three months ago.

ARPU (Average Revenue Per User). Total recurring revenue divided by the number of paying customers. With $480 MRR from 40 customers, ARPU is $12. Some people calculate it across all users including free ones; always check which definition a maker is using. ARPA (per account) is the same idea for products sold to teams.

Revenue vs profit. Revenue is what customers pay. Profit is what is left after hosting, payment fees, tools, contractors and taxes. Maker posts almost always report revenue. A product with $3,000 MRR and $2,500 of monthly costs is a very different business from one with $3,000 MRR and $100 of costs.

Payment processor fees. The percentage plus fixed amount that a payment provider takes from each transaction. On small prices the fixed part matters a lot: a fixed fee of a few tens of cents is a noticeable slice of a $3 charge and a trivial one of a $30 charge.

Merchant of record. A service that sells your product on your behalf and handles sales tax and VAT collection in many countries, in exchange for a higher fee than a plain payment processor. Popular with solo makers who sell globally and do not want to register for tax in dozens of places.

Customers and retention

Churn. The share of customers (or revenue) you lose in a period. If you start the month with 40 customers and 2 cancel, customer churn is 5% for that month. Revenue churn does the same calculation in money, which matters when customers are on different plans. See Reducing Churn for Small SaaS.

Net revenue retention (NRR). How much revenue you keep from an existing group of customers after a period, including upgrades and expansions. Above 100% means upgrades outweigh cancellations and downgrades. It is more relevant for products with usage-based pricing or seats than for a flat $9 plan.

LTV (Lifetime Value). The total revenue you expect from a customer over the whole time they stay. A rough version is ARPU divided by monthly churn: $12 ARPU and 5% monthly churn gives $12 / 0.05 = $240. This formula is crude and very sensitive to small churn numbers, so treat it as an order-of-magnitude estimate, especially with few customers.

CAC (Customer Acquisition Cost). What it costs, on average, to get one paying customer. If you spend $300 on ads and get 10 customers, CAC is $30. For most solo makers the real cost is time rather than money, which is why many report CAC as close to zero. That can be misleading: your time has a cost even if it does not appear on an invoice.

LTV:CAC ratio. LTV divided by CAC, used to judge whether spending on acquisition is sustainable. If LTV is $240 and CAC is $30, the ratio is 8. Venture-backed companies obsess over this; for a tiny bootstrapped product it is useful mainly as a sanity check before you start paying for ads.

Activation. The moment a new user first gets real value from the product, as opposed to merely signing up. For a scheduling tool, it might be "shared a booking link and received a booking." Defining activation clearly is one of the most useful things a small team can do, because it tells you where onboarding is failing.

Retention cohort. A group of users who signed up in the same period, tracked over time to see how many are still active. Cohorts show whether the product is getting stickier as you improve it, which a single overall number can hide.

Trial conversion. The share of trial users who become paying customers. Say 50 people start a trial and 6 pay: 12% trial conversion.

Pricing and deals

Freemium. A model with a permanent free tier and paid upgrades. It can drive signups, but free users cost support and hosting, and many never upgrade. It fits products with low marginal costs and a natural upgrade trigger.

Free trial. Full or partial access for a limited time, after which the user must pay. Trials that ask for a card upfront usually convert a larger share of fewer people; trials without a card get more signups but a lower conversion rate.

Usage-based pricing. Charging by how much the customer uses, such as per API call, per seat or per gigabyte. It aligns price with value but makes revenue less predictable.

Lifetime deal (LTD). A one-time payment for permanent access. Makers use LTDs to raise cash quickly and get early users. The risk is that you commit to serving those customers indefinitely without ongoing revenue from them, and deal-seeking buyers can be demanding. Price them with that cost in mind.

Grandfathering. Letting existing customers keep their old price when you raise prices for new customers. It rewards early users and avoids a wave of cancellations. See How to Price Your SaaS.

Building and shipping

Bootstrapping. Building and growing a business with your own money and revenue, without outside investors. It means slower growth in exchange for full control and no pressure to chase a huge outcome. Most products in this catalog are bootstrapped.

Micro-SaaS. A small software business, usually run by one person or a very small team, that serves a narrow niche. Think of a tool that does one thing for one type of user, like generating invoices for a specific kind of freelancer. The goal is typically a sustainable income rather than a large company.

Indie hacker / indie maker. Someone who builds and sells their own products independently, usually bootstrapped. The terms are used almost interchangeably.

MVP (Minimum Viable Product). The smallest version of a product that lets you test whether people want it. "Viable" is the important word: it has to actually solve the problem, just narrowly.

Dogfooding. Using your own product in your daily work. Short for "eating your own dog food." It surfaces bugs and friction quickly and is one reason many indie products start as tools makers built for themselves.

Boring stack. A set of mature, well-understood technologies chosen for reliability and low maintenance rather than novelty. For example, a single server, a relational database and a server-rendered web framework. See Choosing a Boring Stack.

Scope creep. The gradual expansion of what you plan to build before shipping. It is the most common reason side projects never launch.

Technical debt. Shortcuts in code that make future changes harder. Some is fine and even wise when you are validating an idea; the problem is when it is never paid down.

Launching and growth

Build in public. Sharing progress, decisions, numbers and mistakes openly while you build, usually on social media or a blog. It can grow an audience over time, but it takes effort. See Build in Public Without Burning Out.

Show HN. A post type on Hacker News where people share something they have made so others can try it. It has its own rules: the thing must be usable, not a landing page or signup wall, and the maker is expected to be around to answer questions. See Launching on Product Hunt and Show HN.

Launch platform. A site where makers announce new products and the community votes and comments, such as Product Hunt. Traffic from a launch is usually a short spike.

Waitlist. A list of people who signed up to hear when a product launches. It can help validate interest and give you an audience on launch day. Waitlist signups are cheap to give, so expect only a fraction to become active users.

Landing page. The page that explains the product and asks the visitor to take one action. For an early product, it is often the whole marketing site.

Conversion rate. The share of people who take a desired action out of those who could. Visitors to signups, trial users to paying customers, and so on. Always name both ends of the conversion when you quote one.

Funnel. The sequence of steps from first visit to paying customer, usually visit, signup, activation, payment. Looking at where the biggest drop happens tells you what to fix first.

Distribution. How your product reaches the people who need it. Many makers find that building was the easy part and distribution is the hard one. See Finding Your First 100 Users.

SEO (Search Engine Optimization). Making pages that rank in search results for queries your users type. Slow to build, but traffic tends to compound over time.

Product-market fit. The point where a product clearly satisfies a real demand, so that users stay, pay and recommend it without heavy pushing. It is easier to recognize in hindsight than to measure precisely.

Pivot. Changing a product's target audience, core use case or business model based on what you learned. Small pivots are normal; a pivot is not a failure.

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