Essential SaaS Metrics: Complete Management Guide

12 min read Updated: October 2025
TL;DR

Investors evaluate your SaaS on key metrics: MRR and growth, LTV:CAC ratio, CAC Payback, retention (GRR, NRR), Churn and Rule of 40.

An investable SaaS shows growing MRR (minimum 10%/month), LTV:CAC ratio ≥ 3.0x, GRR >85% and NRR >100%.

Table of contents

Why these metrics?

The 80/20 rule

These 15 metrics represent 80% of the insights needed to effectively manage your SaaS. They answer essential questions:

  • How much am I earning? (Revenue)
  • Am I growing? (Growth)
  • How much does acquiring a customer cost? (Acquisition)
  • Am I retaining my customers? (Retention)
  • How long before running out of cash? (Operational)

Revenue metrics

MRR (Monthly Recurring Revenue)

Predictable monthly recurring revenue generated by all your active subscriptions.

MRR = Σ (Monthly revenue from all active subscriptions)

If you have 100 customers paying €50/month, your MRR is €5,000.

MRR is the basis for calculating all other metrics and especially a traction indicator for investors.

ARR (Annual Recurring Revenue)

Annual projection of recurring revenue.

ARR = MRR × 12

An MRR of €10,000 equals an ARR of €120,000.

For communicating with investors, valuing your company and comparing your performance to industry benchmarks.

ARPA (Average Revenue Per Account)

Average revenue generated per customer per month.

ARPA =
MRR Number of active customers

With an MRR of €10,000 and 100 customers, your ARPA is €100/customer/month.

ARPA indicates your price positioning, is a component of LTV and signals the success of your upsells.

Benchmarks:

  • • SMB SaaS: €50-150
  • • Mid-Market: €200-800
  • • Enterprise: €1,000+

Acquisition metrics

CAC (Customer Acquisition Cost)

Average cost to acquire a new customer.

CAC =
Marketing Costs + Sales Costs New customers

If you spend €10,000/month on acquisition and recruit 25 new customers, your CAC is €400.

CAC determines your profitability. It must be less than 1/3 of LTV and measures the efficiency of your marketing and sales teams.

LTV (Lifetime Value)

Total revenue generated by a customer over their lifetime.

LTV =
ARPA Monthly Churn Rate

With an ARPA of €100/month and a churn of 5%/month, the average lifetime is 20 months (1 ÷ 0.05), so LTV = €2,000.

LTV determines how much you can spend on CAC, indicates product quality and is a key metric for valuation.

LTV:CAC Ratio

Ratio between customer value and acquisition cost.

LTV:CAC Ratio =
LTV CAC

With an LTV of €1,200 and a CAC of €400, the ratio is 3.0x.

Benchmarks:

  • • < 1.0x: You're losing money
  • • 1.0-2.0x: Not profitable enough
  • • 3.0-5.0x: Ideal and scalable
  • • > 5.0x: Under-investing in acquisition

CAC Payback Period

Time needed to recover the CAC investment.

CAC Payback =
CAC (ARPA × Gross margin)

With a CAC of €600, an ARPA of €100 and a margin of 80%, the payback is 7.5 months.

Benchmarks (according to your ICP):

Performance SMB B2B Mid-Market Enterprise
Excellent < 3 months < 6 months < 9 months
Very good 3-6 months 6-12 months 9-18 months
Acceptable 6-12 months 12-18 months 18-24 months
Problematic > 12 months > 18 months > 24 months

Note: A longer sales cycle justifies a higher payback for Enterprise segments.

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Retention metrics

GRR (Gross Revenue Retention)

Percentage of revenue retained from your existing customers (excluding upsell).

GRR =
(Starting MRR - Churn - Downsells) Starting MRR
× 100

GRR measures your ability to retain existing customers without counting upsells. A GRR < 80% indicates a critical retention problem.

Benchmarks:

  • • SMB B2B: 85-90%
  • • Mid-Market: 90-95%
  • • Enterprise: > 95%

NRR (Net Revenue Retention)

Percentage of revenue retained, including upsell and downsell from existing customers.

NRR =
(Starting MRR + Upsell - Downsell - Churn) Starting MRR
× 100

With an MRR of €10,000, €1,000 in upsells, €200 in downsells and €500 in churn, your NRR is 103%.

Benchmarks:

  • • > 120%: Exceptional
  • • 110-120%: Excellent
  • • 100-110%: Good
  • • 90-100%: Average
  • • < 90%: Problematic

Customer Churn Rate

Percentage of customers lost each month.

Churn Rate =
Lost customers Customers at start of month
× 100

If you had 100 customers at the start of March and lost 5, your churn is 5%/month.

Benchmarks (according to your ICP):

Performance SMB B2B Mid-Market Enterprise
Excellent < 2%/month < 1%/month < 0.5%/month
Good 2-5%/month 1-2%/month 0.5-1%/month
Acceptable 5-7%/month 2-3%/month 1-2%/month
Problematic > 7%/month > 3%/month > 2%/month

Note: Enterprise customers have higher switching costs, hence naturally lower churn.

Revenue Churn (MRR Churn)

Percentage of MRR lost each month.

Revenue Churn =
Lost MRR Starting MRR
× 100

With an MRR of €10,000 at the start of the month and €500 lost (churn & downsell), your Revenue Churn is 5%.

A large customer leaving has a much higher MRR impact than a small customer. Revenue Churn is more important for financial health.

Growth metrics

MRR Growth Rate

Month-over-month MRR growth rate.

MRR Growth =
(End of month MRR - Start of month MRR) Start of month MRR
× 100

With an MRR of €10,000 at the start of January and €11,000 at the end of January, your growth is 10%.

Benchmarks (according to your stage):

Performance Seed Series A to B Series C+
Excellent > 20%/month > 15%/month > 10%/month
Good 15-20%/month 10-15%/month 5-10%/month
Acceptable 10-15%/month 5-10%/month 3-5%/month
Problematic < 10%/month < 5%/month < 3%/month

Note: The larger your MRR base, the harder it is to maintain a high growth rate.

Customer Growth Rate

Customer count growth rate.

Customer Growth =
(End customers - Start customers) Start customers
× 100

If you onboard 10 customers on a base of 100 or a base of 50 customers, your Customer Growth rate differs and is 10% and 20% respectively.

Insight

  • Customer growth > MRR growth → Your ARPA is decreasing (downsell)
  • MRR growth > Customer growth → Your ARPA is increasing (upsells)

Rule of 40

Metric combining growth and profitability (EBITDA margin). The Rule of 40 is the metric for Series B+ investors. It measures the balance between growth and profitability.

Rule of 40 = Growth rate (%) + EBITDA margin (%)

Above 50%, you're in an excellent position regardless of your development stage. Between 40% and 50%, it's a good balance between growth and profitability. Below 40%, investors generally consider that you're sacrificing too much profitability for growth, or vice versa.

Operational metrics

Burn Rate

Amount of cash burned each month.

Burn Rate = Monthly expenses - Monthly revenue

With €10,000 in revenue and €15,000 in expenses, your Burn Rate is €5,000/month.

A positive Burn Rate means you're losing cash, while a negative rate means your cash flow is positive.

Runway

Number of months before running out of cash.

Runway =
Cash in bank Burn Rate

Note: This formula doesn't account for your growth, revenue or OpEx. For a more accurate approach, see the dedicated article on runway.

With €50,000 in the bank and a Burn Rate of €5,000/month, your runway is 10 months.

Benchmark:

  • • < 6 months: Danger (urgent fundraising or cost reduction)
  • • 6-12 months: Start preparing fundraising
  • • > 12 months: Comfortable

ARR per Employee

Average productivity per employee.

ARR/Employee =
ARR Number of employees

With an ARR of €1,000,000 and 20 employees, your productivity is €50,000/employee.

Benchmarks:

  • • < €100K: Under-productive
  • • €100-200K: Average
  • • €200-300K: Good
  • • > €300K: Excellent (efficient)

How to track these metrics

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