Essential SaaS Metrics Every Founder Should Track
Master the key metrics that investors care about and learn industry benchmarks for success.
The 7 Critical SaaS Metrics
1. ARR & MRR (Annual/Monthly Recurring Revenue)
MRR = Sum of all monthly subscription revenue
ARR = MRR × 12
Foundation of all SaaS metrics. Represents predictable, recurring revenue stream.
Benchmarks:
- • Seed stage: $10K-100K MRR
- • Series A: $100K-500K MRR
- • Series B: $1M-5M MRR
2. Churn Rate
Monthly Churn % = (Customers lost / Total customers) × 100
Revenue Churn % = (MRR lost / Total MRR) × 100
Percentage of customers or revenue lost per month. Most critical metric for SaaS health.
Excellent
<5%
annual churn
Acceptable
5-7%
annual churn
Problematic
>7%
annual churn
3. CAC (Customer Acquisition Cost)
CAC = (Sales + Marketing costs) / New customers acquired
Total cost to acquire one new customer. Include salaries, ads, tools, and overhead.
⚠️ Critical Rule:
CAC Payback Period should be <12 months. Beyond 18 months = red flag.
4. LTV (Lifetime Value)
LTV = ARPA × Gross Margin % / Churn Rate %
ARPA = Average Revenue Per Account
Total revenue expected from a customer over their entire relationship.
Golden Ratio:
LTV / CAC > 3
Minimum for healthy SaaS business. Best-in-class: 5-7×
5. Burn Rate & Runway
Gross Burn = Total monthly expenses
Net Burn = Gross Burn - Revenue
Runway = Cash balance / Net Burn
How fast you're spending money and how long until you run out.
Minimum runway: 12-18 months. Start fundraising at 9 months runway.
6. NRR (Net Revenue Retention)
NRR = [(Starting MRR + Expansion - Churn) / Starting MRR] × 100
Revenue retention from existing customers including upsells and downgrades.
Survival
90-100%
Good
100-110%
Best-in-class
>120%
7. Growth Rate
MoM Growth % = [(This month MRR - Last month MRR) / Last month MRR] × 100
Month-over-month revenue growth rate. Critical for investor interest.
| Stage | Target MoM Growth |
|---|---|
| Seed | 15-20% |
| Series A | 10-15% |
| Series B+ | 5-10% |
The Rule of 40
Growth Rate % + Profit Margin % ≥ 40
The ultimate health indicator for SaaS companies. Balances growth and profitability.
✓ Good Example
50% growth + (-10)% margin = 40
✗ Bad Example
20% growth + 5% margin = 25
Build Your Metrics Dashboard
Essential Tools:
- •Financial tracking: ChartMogul, Baremetrics, ProfitWell
- •Analytics: Mixpanel, Amplitude, Heap
- •Reporting: Google Data Studio, Tableau, Metabase
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