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SaaS Metrics Guide: The 12 Numbers Every Founder Must Track
MRR, ARR, Churn, CAC, LTV, NRR — explained simply with formulas and benchmarks. Know which metrics matter at each stage of your SaaS growth.
In This Guide
Why Metrics Are Your SaaS Compass
Metrics tell you if you're building a business or a hobby. The right metrics at the right stage guide every decision — pricing changes, hiring, fundraising, and acquisition.
Revenue Metrics: The Foundation
These are the core financial health indicators every investor and founder must know cold.
- MRR (Monthly Recurring Revenue): Total predictable revenue per month. Formula: Sum of all active subscription values.
- ARR (Annual Recurring Revenue): MRR × 12. Used for enterprise and investor conversations.
- New MRR: Revenue from new customers this month.
- Expansion MRR: Revenue from upgrades and upsells.
- Churned MRR: Revenue lost from cancellations and downgrades.
- Net New MRR: New MRR + Expansion MRR − Churned MRR.
Churn: The Metric That Kills SaaS Companies
Churn is the silent killer. At 5% monthly churn, you lose 46% of revenue every year. Good B2B SaaS has <2% monthly churn.
- Customer Churn Rate: (Customers lost / Starting customers) × 100
- Revenue Churn Rate: (MRR lost / Starting MRR) × 100
- Benchmark: <2% monthly = good, <1% = great, >5% = crisis
- Negative revenue churn: expansion revenue > churned revenue
Unit Economics: CAC and LTV
These two metrics determine if your business model is viable. You must earn more from a customer than it costs to acquire them — by a wide margin.
- CAC (Customer Acquisition Cost): Total sales + marketing spend / New customers. Benchmark: <3 months of ACV.
- LTV (Lifetime Value): ARPU × Gross Margin / Churn Rate. Benchmark: LTV:CAC ratio should be >3x.
- Payback Period: CAC / (Monthly ARPU × Gross Margin). Target: <12 months for SMB, <18 months for enterprise.
Growth Metrics
Track these to understand your growth trajectory and compounding dynamics.
- MoM Growth Rate: Sustainable SaaS grows 10-20% MoM early stage.
- NRR (Net Revenue Retention): (MRR start + Expansion − Contraction − Churn) / MRR start. Target: >100% = customers paying more over time.
- Quick Ratio: (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR). Target: >4 is healthy.
- Rule of 40: Growth Rate % + Profit Margin % should exceed 40 for investor quality.