Your subscription revenue data isn't just numbers—it's the roadmap to growth. But with so many SaaS metrics to track, which metrics truly matter? How do you calculate them? And most importantly, how do you use them to make smart growth decisions?
This is your go-to resource for measuring SaaS metrics that drive success. Whether you’re a founder, VP of Sales, growth leader, or investor, this guide unpacks SaaS metrics into a simple, actionable format.
Download the SaaS Metrics Cheat Sheet for a quick overview of key SaaS metrics.
Download PDFGo to the SaaS Metrics Library for detailed SaaS metrics guides, advanced calculations, and industry benchmarks.
SaaS metrics can be divided under four umbrellas:
- Growth metrics: offer a high-level overview of revenue performance.
- Retention metrics: prove how well you’re enabling your customers to succeed.
- Efficiency metrics: helps balance the cost of growth.
- Sales metrics: measure how effectively your sales team generates new MRR.
Growth metrics
These metrics offer a high-level overview of your revenue performance. Expect your key stakeholders and investors to pay particular attention to these numbers.
- Monthly Recurring Revenue (MRR)
- Annualized Run Rate (ARR)
- Average Revenue Per Account (ARPA)
- Average Sale Price (ASP)
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) measures your normalized (amortized) monthly subscription revenue. SaaS is all about the steady growth of predictable, monthly recurring subscription revenue, which means that MRR is arguably the most critical revenue metric.
Tracking and analyzing your MRR is crucial to understanding and growing your business. It allows you to see how you’ve performed so far and forecast where you’ll be next month, quarter, or year.
Joel Gascoigne, CEO at Buffer I'm always looking at MRR. At the end of the day, that's our revenue and drives a lot of other strategic decisions such as hiring and other spend.
Annualized Run Rate (ARR)
SaaS businesses track ARR to better understand their revenue and predict the company’s growth.
The Annual(lized) Run Rate is calculated by multiplying your MRR by 12 (MRR x 12).
Average Revenue Per Account ARPA (also ARPC, ARPU)
Average Revenue Per Account (ARPA) measures the amount of money a single customer generates for a company. This metric is also known as Average Revenue Per User (ARPU) or Average Revenue Per Customer (ARPC).
Why is ARPA important? In short, understanding ARPA can help set or adjust your pricing model and evaluate customer acquisition costs.
Average Sale Price (ASP)
The Average Sale Price (ASP) measures the average MRR of new customers at the moment they convert to paid accounts.
ASP helps evaluate sales team performance, decide where to allocate your advertising budget, and shape your pricing strategy.
It's calculated by dividing new business MRR by new customers in the same period.
MRR movements
Breaking MRR into its component parts gives useful insight into your business's inbound and outbound revenue flows. When viewed as a monthly trend, it’s easy to evaluate high-level performance compared to previous months.
Reactivation
Reactivation MRR is where previously active customers move back onto a paid plan.
Expansion
Expansion MRR involves revenue added from existing customers. For example, customers paying more due to upgrading to a higher pricing tier or customers buying add-ons.
New Business
New Business MRR is the new (recurring) revenue added during a given period. Leads converting to new customers.
Churn
Churned MRR covers the people who cancel their plans during a given time period.
Contraction
Contraction MRR is the opposite of expansion, meaning customers could switch to a lower-priced plan or stop using the add-on that they were once paying for.
Retention metrics
Are customers achieving their business goals with your product?
Retention metrics help you measure the impact of your efforts and provide insight into how well your customer support team is enabling users to succeed and driving overall customer satisfaction.
Customer Churn Rate
The rate at which your customers are canceling their subscriptions.
To calculate your customer churn rate, divide the number of customers who churned in a period by the number of customers at the start of that period.
Customer churn and revenue churn can differ significantly depending on how revenue is distributed across your customer base. This is why it’s essential to examine both metrics to get a comprehensive understanding of your SaaS business.
Revenue Churn
Revenue churn measures the rate at which revenue is leaving your SaaS business. You can calculate the revenue churn rate in two different ways.
To calculate gross revenue churn, sum up your churn and contraction MRR and divide it by MRR at the start of the same period.
To calculate your net churn rate, take your churn and contraction MRR subtracted by expansion and reactivation revenue and divide it by your MRR at the start of the period.
Customer Retention Rate
Customer retention rate measures the percentage of customers retained over a period of time.
To calculate customer retention rate, divide the number of paying customers (from paying customers one year ago) by the number of paying customers one year ago.
Sam Jacobs, Founder and CEO at Pavilion In the world of Growth at Any Cost (GAAC), the #1 KPI everybody obsessed over was new business growth. But in 2024, the KPI that's going to enable your long-term growth is retention. It's not your ability to attract a new customer that matters most, but keeping them over a sustained period of time.
Net Revenue Retention (NRR)
Net Revenue Retention (NRR), also known as net dollar retention (NDR), measures the percentage of revenue retained over a period of time, after gains from expansion and offset by contraction and churn.
Retention can be measured over any time period, but it is common to measure it over 12 months. For example, if you have $100k MRR on day one, what percentage of that revenue do you still have 12 months later?
Gross Revenue Retention (GRR)
Gross Revenue Retention (GRR), also known as gross dollar retention, measures the percentage of revenue retained, excluding expansions, over a period of time.
Nick Franklin, Founder & CEO, ChartMogul In reality, for every B2B SaaS business retention becomes the biggest growth driver in a way. So it is worth focussing on retention really from day one, perhaps even before you actually have any meaningful retention data to look at.
Negative Churn
Net negative churn exists when the MRR (monthly recurring revenue) gained from existing customers (expansion and reactivation) exceeds the MRR lost from churn and contraction. It is known as the holy grail of SaaS and is the only kind of churn you want.
Simply put, the revenue added by retained and growing customers outweighs the revenue lost from those who leave or contract.
What is a good NRR rate?
When it comes to NRR, what is ‘good’ depends on the stage of business you are at. However, B2B SaaS companies should aim for over 100%.
Net revenue retention rate (%) by ARR range
- 75th percentile
- Median
- 25th percentile
| Net revenue retention rate | 75th percentile | Median | 25th percentile |
|---|---|---|---|
| <$300K | 79.2% | 57.6% | 37.8% |
| $300k-1M | 87.4% | 70.2% | 48.1% |
| $1-3M | 94.2% | 77.9% | 57.8% |
| $3-8M | 98.9% | 82.1% | 61.0% |
| $8-15M | 99.1% | 81.3% | 66.9% |
| $15-30M | 105.3% | 93.4% | 64.3% |
source: The SaaS Retention Report
What is a good monthly churn rate?
The monthly net and gross MRR churn rate of a median company is higher in the initial stages of the business. As companies find product-market fit and hone into their customer category, churn reduces.
A median early-stage SaaS company has a 6.2% net MRR churn rate and a 4.1% gross MRR churn rate. A median company over $1M ARR has a 2.3% net MRR churn rate and a 5.3% gross MRR churn rate. Meanwhile, a median company over $15M ARR has a 1.8% net MRR churn rate and a 5.8% gross MRR churn rate.
| New MRR Churn Rate (Monthly) | <$300k | $300k-1M | $1-3M | $3-8M | 8-15M | $15-30M |
|---|---|---|---|---|---|---|
| Best-in-class / Top decile | 0.2% | -0.4% | -1.2% | -0.8% | -0.8% | -1.1% |
| Good / Top quartile | 2.4% | 0.8% | 0.3% | 0.2% | -0.1% | -0.4% |
| Ok / Median | 6.2% | 3.1% | 2.3% | 1.6% | 1.4% | 1.8% |
| Can be better / Bottom quartile | 12.3% | 6.7% | 5.5% | 4.1% | 3.1% | 5.4% |
| Gross MRR Churn Rate (Monthly) | <$300k | $300k-1M | $1-3M | $3-8M | 8-15M | $15-30M |
|---|---|---|---|---|---|---|
| Best-in-class / Top decile | 2.5% | 2.0% | 1.6% | 2.0% | 1.6% | 1.5% |
| Good / Top quartile | 4.8% | 3.6% | 3.0% | 3.3% | 2.8% | 2.2% |
| Ok / Median | 4.1% | 5.7% | 5.3% | 5.3% | 4.0% | 5.8% |
| Can be better / Bottom quartile | 16.5% | 10.5% | 9.0% | 9.5% | 8.0% | 11.1% |
| Customer Churn Rate (Monthly) | <$300k | $300k-1M | $1-3M | $3-8M | 8-15M | $15-30M |
|---|---|---|---|---|---|---|
| Best-in-class / Top decile | 1.5% | 1.4% | 1.3% | 1.3% | 1.5% | 1.3% |
| Good / Top quartile | 3.2% | 2.5% | 2.2% | 2.3% | 2.0% | 1.7% |
| Ok / Median | 6.5% | 4.1% | 3.7% | 3.8% | 3.1% | 4.1% |
| Can be better / Bottom quartile | 11.6% | 7.3% | 6.9% | 6.5% | 5.6% | 7.4% |
Cohort analysis
“A cohort is simply a fancy name for a group” - David Skok (@BostonVC)
In SaaS, we use cohort analysis to observe what happens to a group of customers that join in a particular time period. So we have an October 2023 cohort, a November 2023 cohort, etc. We then visualize how our various cohorts behave over time.
Cohort analyses are a powerful tool to help you understand how your subscriptions evolve over time and identify important trends in churn or retention.
Efficiency metrics
Success in SaaS businesses has a lot to do with the cost of growth. Growing efficiently means balancing acquisition cost with customer lifetime value (LTV) and fostering healthy expansion revenue.
Customer Lifetime Value (LTV)
Customer Lifetime Value (LTV) is the estimated revenue you’ll receive from an average subscriber over their lifetime, from signup through cancellation.
This basic formula for LTV is commonly accepted as a useful starting point for estimating the LTV of SaaS customers.
Customer Acquisition Cost (CAC)
CAC stands for customer acquisition cost. It is a measure of the total cost your business incurs to turn someone who’s never heard of your company into a paying customer.
To calculate CAC take all the marketing spend in a given period and divide it by the number of customers attracted in that same period.
CAC : LTV Ratio
Used to approximate return on investment (ROI) for customer acquisition. A ratio of 1:3 is generally accepted as a good target for SaaS.
Quick Ratio
A measure of a company’s ability to grow recurring revenue in spite of churn. Sometimes referred to as growth efficiency.
Quite simply, what is the ratio of the money coming in to the money going out? The higher the ratio, the more efficient the growth.
Payback Period
How long does it take for a customer to “pay back” their acquisition cost? A higher LTV relative to CAC indicates a shorter payback period, allowing companies to invest more in growth.
The payback period is the average time taken for CAC to be recouped through MRR.
Sales metrics
Use these metrics to understand the effectiveness of your sales organization at bringing valuable new MRR to your business.
Average Sales Cycle Length
The average number of days it takes for a lead to convert into an active paying customer.
Tracking the average sales cycle length helps with sales forecasting and shows how efficient your sales process and team are. A shorter sales cycle is ideal because it requires less time and fewer resources to close new deals.
Several factors affect how long it takes for a lead to move through your sales process and become a paying customer. Identifying and understanding these factors is key to increasing sales velocity and shortening your sales cycle.
In general, sales cycles tend to be longer when the average sale price is higher. Other factors like trial length, the time it takes freemium users to engage with your product, pricing, and seasonality can also influence the length of your sales cycle.
ACV Annual Contract Value
Annual contract value (or ACV) measures the total revenue a customer generates for your company on an annual basis. Don’t include any one-time fees, just subscription revenue.