SaaS Metrics Guide: The 12 Numbers Every Founder Must Track

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.