🔗 The Guide to SaaS Metrics

Introduction | The Guide to SaaS Metrics

The Software as a Service (SaaS) model is different since the initial sale rarely covers the cost of acquiring the customer. Instead, SaaS companies recoup their upfront investment over time, often in monthly or annual subscription fees.

The critical question is: How quickly can despair turn into profitability? And how big is the prize outside the triangle?

CATEGORY	DESCRIPTION	METRICS
Unit Economics	How profitable is each customer relationship over its lifetime? Can we scale customer acquisition sustainably?	Average Revenue Per Account (ARPA) Lifetime Revenue (LTR) Lifetime Value (LTV) Customer Acquisition Cost (CAC) LTV:CAC Payback Period
ARR	How is our recurring revenue growing, and what are the key factors driving changes in this growth?	ARR ARR Components (Gross New, Churn, Contraction, Expansion, and Restart ARR)
Retention	How effectively are we retaining our customer base, and what are the reasons for customer loss or reduction in spend?	Gross Logo Churn Gross Dollar Churn Net Dollar Churn Gross Dollar Retention Net Dollar Retention Logo Retention
Engagement	How frequently and deeply are users interacting with our product, and what does this imply about its value?	DAU, WAU, MAU DAU/WAU, DAU/MAU A3x7
Investor Benchmarks	How efficiently is our company using its resources to generate growth, and how does it compare to market expectations?	ARR Multiple Burn Multiple Magic Number

SaaS business performance metrics covered in this guide.

See also The Ultimate Guide to ARR.