MRR, ARR, Churn, ASP, MRR movement, Customer Rentention, LTV, Quick Ratio, CAC, Payback period and more
These affect how you look at revenue metrics
A measure of your normalized (amortized) monthly subscription revenue.
MRR x 12
A state achieved when revenue expansion outweighs churn and downgrade revenue.
In this case, net MRR churn has a negative value
The average MRR of new customers at the moment they convert to paid accounts
(New business MRR in period) / (New customers in same period)
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.
The rate at which your customers are canceling their subscriptions.
(Churned customers in period) / (Total customers at start of period)
The rate at which MRR is renewed
(MRR of renewed subscriptions) / (MRR of subscriptions up for renewal)
The rate at which customers renew their subscriptions
(Number of renewed customers) / (Number of contracts up for renewal)
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)
A state achieved when revenue expansion outweighs churn and downgrade revenue.
In this case, net MRR churn rate has a negative value.
(Sum of sales & marketing expenses) / (No. of new customers added)
(New business MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
An estimate of the average total value of a customer over their lifetime (from signup to churn)
ARPA x (gross margin %) / (Customer churn rate)
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
The average time taken for CAC to be recouped through MRR
CAC / (ARPA x gross margin %)
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
The average number of days taken for a lead to convert into an active paying customer
The average annualized revenue per customer contract.
Don’t include any one-time fees, just subscription revenue