Essential SaaS Metrics Every Startup Should Know

Track what matters! Here is a concise guide to the metrics that drive growth, retention, and revenue in your SaaS journey.

MRR (Monthly Recurring Revenue) – Predictable monthly revenue from subscriptions.
ARR (Annual Recurring Revenue) – Annualised version of MRR, indicating yearly subscription revenue.
New MRR – Monthly revenue gained from new customer subscriptions.
Expansion MRR – Revenue added from existing customers via upsells or add-ons.
Contraction MRR – Revenue lost due to downgrades from existing customers.
Churned MRR – Revenue lost due to customer cancellations.
Net New MRR – Net growth in MRR: New + Expansion – Contraction – Churned.
MRR Growth Rate – Percentage growth in MRR from one month to the next.
ARR Growth Rate – Year-over-year percentage growth in ARR.
CMRR (Committed Monthly Recurring Revenue) – Future predictable MRR including signed contracts minus known churn.
Billings vs. Revenue – Cash collected (billings) vs revenue recognized.
Deferred Revenue – Billed revenue not yet earned.

Rule of 40 – Revenue growth % + Profit margin % should be ≥ 40% for a healthy SaaS.
Magic Number – Indicates sales efficiency: ARR generated per Re. 1 spent on sales & marketing.
CAC Payback Period – Time it takes to recoup the cost of acquiring a customer.
Sales Cycle Length – Average time from first touch to deal closed.
Revenue per Employee – Total revenue divided by number of employees; team efficiency signal.
Operating Margin – Operating profit as a percentage of revenue.
Cash Conversion Score – Measures how effectively profits turn into actual cash.
Quick Ratio (SaaS) – (New MRR + Expansion MRR) ÷ (Churned MRR + Contraction MRR).
Sales Efficiency – New ARR ÷ previous period Sales & Marketing spend.
Customer Success Efficiency – Revenue expansion attributed to Customer Success ÷ CS cost.

Customer Churn Rate – Percentage of customers lost during a period.
Revenue Churn Rate – Percentage of revenue lost from existing customers.
Net Revenue Retention (NRR) – Revenue retained from existing customers including upsells and downgrades.
Gross Revenue Retention (GRR) – Revenue retained from existing customers, excluding upsells.
Logo Churn Rate – Percentage of customers (logos) lost in a period.
Net Dollar (Or Revenue) Retention by Cohort – NRR segmented by groups of customers acquired at the same time.
Gross Logo Retention – % of customers retained without expansion.
Cohort-based Gross Revenue Retention – GRR analysed by acquisition cohorts.

Customer Lifetime Value (LTV) – Estimated revenue generated by a customer during their time with you.
Customer Acquisition Cost (CAC) – Cost to acquire one new customer.
LTV:CAC Ratio – Efficiency ratio comparing customer value to acquisition cost.
Win Rate – Percentage of qualified leads that convert into paying customers.
Cost to Serve per Customer – Average cost of servicing and supporting a customer.
Revenue per Lead (RPL) – Revenue ÷ total leads.

ARPU (Average Revenue Per User) – Revenue earned per user per period.
DAU/WAU/MAU – Daily, weekly, and monthly active users to track product usage.
DAU/MAU Ratio – Measures product stickiness via daily vs monthly user engagement.
Activation Rate – Percent of users reaching a defined “aha” moment post-signup.
Onboarding Completion Rate – Share of users who complete the initial setup process.
Feature Adoption Rate – Percentage of users actively using a particular product feature.
Time to First Value (TTFV) – Time it takes a user to experience their first core value from the product.
Product Qualified Leads (PQLs) – Users who hit specific in-product engagement thresholds that signal sales readiness.
Session Duration – Average time per user session.
Stickiness Index – Alternative/additional DAU/WAU, customised by product category.

Support Tickets per User – Number of support queries raised per user (product stability signal).
Revenue Concentration – Risk metric that flags when a few customers account for most of the revenue.
Customer Health Score – Composite score (usage, CSAT, ticket volume).
First Response Time – Average time to first reply to a support ticket.
Resolution Time – Average time to solve a ticket.

Gross Margin – Revenue minus cost of goods sold, expressed as a % of revenue.
Burn Rate – Monthly cash spend, typically for early-stage companies.
Runway – Months remaining before the company runs out of cash at current burn rate.
Expansion Revenue Rate – % of total revenue coming from expansions.
Valuation to Revenue Ratio – Company valuation divided by revenue (for fundraising/exits).