Variance analysis is the quantitative investigation of the difference between actual and planned behavior. In SaaS, this usually refers to the difference between forecasted budget/revenue and actual results.
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What are the two types of variance?
1. Favorable variance (e.g., spending less than budget or making more revenue). 2. Unfavorable variance (e.g., higher churn than forecasted). Ops teams use this to figure out why the "Actuals" deviated from the "Plan."
Knowledge Challenge
Mastered Variance Analysis in SaaS Finance? Now try to guess the related 6-letter word!
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