Essential SaaS Metrics: Complete Guide for 2024
Tracking the right SaaS metrics is crucial for understanding business health, making data-driven decisions, and achieving sustainable growth. This guide covers every critical metric SaaS founders need to monitor.
Revenue Metrics
Monthly Recurring Revenue (MRR)
Formula: Sum of all subscription revenue normalized to monthly
MRR is your most important top-line metric. Track new MRR, expansion MRR, contraction MRR, and churned MRR separately to understand growth components.
Annual Recurring Revenue (ARR)
Formula: MRR × 12
ARR is MRR annualized. Use ARR for annual planning and investor conversations. Companies with significant enterprise business focus more on ARR than MRR.
Growth Metrics
MRR Growth Rate
Formula: (Current MRR - Previous MRR) ÷ Previous MRR × 100
Target: 10-20% monthly for early stage, 5-10% for growth stage
Customer Growth Rate
Formula: (New Customers - Churned Customers) ÷ Starting Customers × 100
Track net customer growth monthly. Positive growth compounds while negative growth creates death spiral.
Unit Economics
Customer Acquisition Cost (CAC)
Formula: Total Sales & Marketing Costs ÷ New Customers Acquired
Include all acquisition costs: ads, content, salaries, tools. Track by channel for optimization. Learn more in our CAC:LTV guide.
Customer Lifetime Value (LTV)
Formula: ARPU × Average Customer Lifespan
LTV represents total revenue from average customer. Aim for LTV:CAC ratio of 3:1 minimum.
Retention Metrics
Churn Rate
Formula: Customers Lost ÷ Starting Customers × 100
Target: Under 5% monthly for B2B SaaS. Read our churn guide for reduction strategies.
Net Revenue Retention (NRR)
Formula: (Starting MRR + Expansion - Churn) ÷ Starting MRR × 100
Target: 100%+ (negative net churn). Best SaaS companies achieve 120-150% NRR.
Efficiency Metrics
CAC Payback Period
Formula: CAC ÷ (ARPU × Gross Margin)
Target: Under 12 months. Longer payback requires more capital to grow.
Magic Number
Formula: (Current Quarter Net New ARR) ÷ (Prior Quarter S&M Spend)
Target: 0.75+ indicates efficient growth ready to scale S&M spend.
Product Metrics
Activation Rate
Percentage of signups who complete key onboarding actions. Higher activation correlates with lower churn and higher LTV.
Daily/Monthly Active Users (DAU/MAU)
Track engagement to identify at-risk customers and validate product-market fit. DAU/MAU ratio shows stickiness.
Quick Ratio
SaaS Quick Ratio
Formula: (New MRR + Expansion MRR) ÷ (Churned MRR + Contraction MRR)
Target: 4+ indicates healthy growth. Below 1 means you're losing ground.
Key Takeaways
- Track MRR and growth rate as primary health indicators
- Maintain LTV:CAC ratio above 3:1
- Keep monthly churn under 5% for B2B
- Achieve CAC payback within 12 months
- Monitor cohort retention and NRR
Use our pricing calculator to model how different metrics impact profitability and growth.