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.
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