Mastering your metrics is key to controlling your business’s narrative and getting everyone on board rowing in the same direction. It’s a lot of upfront work that pays dividends down the line.
If you’re a founder or early operating hire, we know how daunting it can feel to take that on yourself. We’ve been in those shoes. They can get uncomfortable quickly, but they don’t have to.
To help you along the way, here’s a cheat sheet on all the essential SaaS metrics for quick reference:
| Metric | Description | Formula |
|---|---|---|
| Average Revenue Per Account (ARPA) | Measures the average revenue generated per account over a specified period, typically a month. | |
| Lifetime Revenue (LTR) | Estimates the total revenue a company can expect to gain from a customer over their lifetime. | |
| Lifetime Value (LTV) | Estimates the total revenue a company can expect to gain from customers, net of their costs to serve them, over their lifetime. | |
| Customer Acquisition Cost (CAC) | The average sales & marketing cost associated with acquiring a single customer over a given period. | |
| LTV:CAC | Compares the lifetime value of a customer to the cost of acquiring them. | |
| Payback Period | Estimate of the time it takes to break even on the cost of acquiring a customer. | |
| Net New ARR | The change in Annual Recurring Revenue between two periods. | |
| Gross Logo Churn | The percent of customers lost over a given time period. | |
| Net Churn | The percentage of recurring revenue that is lost from customers that quit over a given period, net of expansion and contraction. | |
| Logo Retention | The percentage of initial customer accounts from a cohort that remain active over a given period. | The number of customers retained for a given cohort. |
| Gross Dollar Retention | The percentage of recurring revenue from a cohort of customers retained over a specific period, excluding any revenue gained from expansions. | The revenue retained for a given cohort, without considering expansion. |
| Net Dollar Retention | The percentage of recurring revenue from a cohort of customers retained over a specific period, net of contraction, churn, and expansion. | The revenue retained for a given cohort, considering expansion and contraction . |
| Active Users (DAU, WAU, MAU) | The number of unique users interacting with a product on a given day, week, or month. | Count of unique users who perform a key action in-product during a day, week, or month. |
| ARR Multiple | A valuation metric that compares a company’s market cap to its annual recurring revenue. | |
| Burn Multiple | A measure of how efficiently a company is using its cash to generate new annual recurring revenue. | |
| Magic Number | A measure of how efficiently a company turns its marketing & sales spending into annual recurring revenue. |
If you’re ever feeling overwhelmed and need a partner to support you in the trenches, don’t hesitate to reach out to us.
We’re all about helping businesses like yours better understand their business by nailing their SaaS metrics. It starts with setting up great reporting systems. We’ve been around the block with scores of SaaS companies (including Intercom, Stripe, and Atlassian) and can help you, too.
If, after eating up 19,000 words, you’re still hungry for more, here are some of our favorite resources on building SaaS businesses: