SaaS metrics

MRR, ARR, Churn, ASP, MRR movement, Customer Rentention, LTV, Quick Ratio, CAC, Payback period and more

A cheatsheet by @miccohen|Refreshed 10 months ago.Refresh|View source on Github

These affect how you look at revenue metrics

Monthly Recurring Revenue

Monthly Recurring Revenue

A measure of your normalized (amortized) monthly subscription revenue.

Negative Churn

Negative Churn

A state achieved when revenue expansion outweighs churn and downgrade revenue.

In this case, net MRR churn has a negative value

Average Revenue Per Account (ARPA)

Average Revenue Per Account (ARPA)

The average MRR across all customers

MRR / customer_count

Average Sale Price (ASP)

Average Sale Price (ASP)

The average MRR of new customers at the moment they convert to paid accounts

(New business MRR in period) / (New customers in same period)

5 types

5 types

Reactivation Previously active customers moving back into paid plan.
Contraction Increase from existing customers, usually from upgrades.
Expansion Increases from existing customers, usually from upgrades.
New Business Leads converting to new customers.
Churn Customers canceling active subscriptions.

Are customers achieving their business goals within your product?

These metrics help measure the impact of customer success within your business.

Customer Churn Rate

Customer Churn Rate

The rate at which your customers are canceling their subscriptions.

(Churned customers in period) / (Total customers at start of period)

MRR Retention Rate

MRR Retention Rate

The rate at which MRR is renewed

(MRR of renewed subscriptions) / (MRR of subscriptions up for renewal)

Customer Retention Rate

Customer Retention Rate

The rate at which customers renew their subscriptions

(Number of renewed customers) / (Number of contracts up for renewal)

Net MRR Churn Rate

Net MRR Churn Rate

The rate at which MRR is lost - offset by expansion MRR

((Sum of churn & contraction MRR) - (Sum of expansion & reactivation MRR)) / (MRR at start of period)

Negative Churn

Negative Churn

A state achieved when revenue expansion outweighs churn and downgrade revenue.

In this case, net MRR churn rate has a negative value.

Customer Acquisition Cost CAC

Customer Acquisition Cost CAC

(Sum of sales & marketing expenses) / (No. of new customers added)

Quick Ratio

Quick Ratio

(New business MRR + Expansion MRR) / (Churned MRR + Contraction MRR)

Customer Lifetime Value LTV

Customer Lifetime Value LTV

An estimate of the average total value of a customer over their lifetime (from signup to churn)

ARPA x (gross margin %) / (Customer churn rate)

CAC : LTV Ratio

CAC : LTV Ratio

Used to approximate return on investment for customers acquisition.
A ratio of 1:3 is generally accepted as a good target for SaaS.

CAC / LTV

Payback Period

Payback Period

The average time taken for CAC to be recouped through MRR

CAC / (ARPA x gross margin %)

MRR Expansion Rate

MRR Expansion Rate

The rate of new recurring revenue added from existing customers, usually through add-ons and upgrades.

((Expansion MRR at end of month) - (Expansion MRR at beginning of month)) / (Expansion MRR at beginning of month) x 100

Average Sales Cycle Length

Average Sales Cycle Length

The average number of days taken for a lead to convert into an active paying customer

ACV Annual Contract Value

ACV Annual Contract Value

The average annualized revenue per customer contract.
Don’t include any one-time fees, just subscription revenue