SaaS Metrics: Complete Guide to MRR, ARR, Churn, CAC, LTV
Revenue Metrics
MRR (Monthly Recurring Revenue)
The heartbeat of your business. Total predictable revenue per month.
Calculation: Sum of all active subscriptions' monthly value
MRR Components:
- New MRR — From new customers
- Expansion MRR — Upgrades and add-ons
- Contraction MRR — Downgrades
- Churned MRR — Lost customers
Net New MRR = New + Expansion - Contraction - Churned
ARR (Annual Recurring Revenue)
MRR × 12. Used for longer-term planning and valuation discussions.
Growth Benchmarks (Early Stage)
| Stage | Good MRR Growth |
|---|---|
| Pre-PMF ($0-10K) | 20-30%/month |
| Finding PMF ($10K-50K) | 15-20%/month |
| Post-PMF ($50K-100K) | 10-15%/month |
| Scaling ($100K+) | 7-10%/month |
Churn Metrics
Customer Churn Rate
Percentage of customers who cancel per period.
Calculation: (Customers lost in period) / (Customers at start of period) × 100
Example: Started month with 100 customers, lost 5 → 5% monthly churn
Revenue Churn Rate
Percentage of MRR lost per period. Usually higher than customer churn if you lose larger customers.
Calculation: (MRR lost in period) / (MRR at start of period) × 100
Net Revenue Retention (NRR)
How much revenue you keep + expand from existing customers.
Calculation: (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
NRR > 100% = Growing even without new customers (excellent)
NRR < 100% = You're leaking revenue (fix retention)
Churn Benchmarks
| Segment | Target Monthly Churn |
|---|---|
| SMB ($50-200/mo) | 3-5% |
| Mid-Market ($200-1000/mo) | 1-2% |
| Enterprise ($1000+/mo) | <1% |
Customer Acquisition Metrics
CAC (Customer Acquisition Cost)
Total cost to acquire one customer.
Calculation: (Sales + Marketing spend) / New customers acquired
Example: Spent $10,000 on marketing, acquired 50 customers → $200 CAC
Blended vs. Paid CAC
- Blended CAC — All customers (including organic)
- Paid CAC — Only paid acquisition channels
Paid CAC is usually higher and more useful for planning.
LTV (Lifetime Value)
Total revenue from a customer over their lifetime.
Simple calculation: ARPU / Monthly Churn Rate
Example: $100/month ARPU, 5% churn → $100 / 0.05 = $2,000 LTV
LTV:CAC Ratio
The magic ratio. How much value you get vs. what you spend to acquire.
Calculation: LTV / CAC
Benchmarks:
- < 1:1 — Losing money on every customer
- 1:1 - 3:1 — Barely sustainable, needs improvement
- 3:1 - 5:1 — Healthy business
- > 5:1 — Could invest more in growth
Engagement Metrics
DAU/MAU Ratio
Daily Active Users / Monthly Active Users. Measures stickiness.
Benchmarks:
- 50%+ — Daily habit (email, messaging)
- 25-50% — Strong engagement
- 10-25% — Weekly use
- <10% — Infrequent use (may be okay for some tools)
Time to Value
How long until a user experiences core value?
Shorter = better retention. Track when users complete key actions and optimize onboarding.
Feature Adoption
What percentage of users use key features? Low adoption of core features signals onboarding or product problems.
Building Your Dashboard
Stage 1: Pre-Revenue ($0 MRR)
Focus on:
- Signups
- Activation rate (% who complete key action)
- User feedback (qualitative)
Stage 2: Early Revenue ($1-50K MRR)
Focus on:
- MRR and growth rate
- Churn rate
- Activation rate
- Basic CAC (if spending on ads)
Stage 3: Growth ($50K+ MRR)
Full metrics suite:
- MRR components (new, expansion, churn)
- LTV:CAC ratio
- Net Revenue Retention
- Payback period
- Cohort analysis