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Start FreeDefinitions, formulas, and benchmarks for the metrics that matter most in a subscription business - explained in plain English.
Normalized monthly revenue from all active subscriptions. One-time fees and usage charges are excluded. MRR is the heartbeat of a subscription business - it shows predictable, recurring income at a glance.
Benchmark: Break MRR into New, Expansion, Contraction, and Churned components to understand what's driving growth or decline.
Annualized value of your recurring revenue. ARR is the standard metric for investor reporting, SaaS company valuations, and benchmarking against peers. It smooths out monthly fluctuations into a yearly view.
Benchmark: SaaS companies are typically valued at 5–15× ARR. Your growth rate matters more than the absolute number.
The percentage of customers (or revenue) lost in a given period. Customer churn tracks headcount loss; revenue churn tracks MRR loss. Both matter - one churned enterprise account can outweigh dozens of lost SMBs in revenue terms.
Benchmark: B2B SaaS: 3–7% monthly. B2C SaaS: 5–10% monthly. Below 2% per month is considered excellent.
Total revenue expected from a single customer over their entire relationship with your product. LTV is the anchor for all acquisition and retention investment decisions - it defines how much you can afford to spend on CAC.
Benchmark: LTV should be at least 3× CAC. If it's lower, your unit economics are unsustainable at scale.
Total sales and marketing spend divided by new customers acquired in the same period. CAC should always be evaluated alongside LTV and payback period - a high CAC is acceptable if LTV is proportionally higher.
Benchmark: LTV:CAC ratio of 3:1 or higher signals healthy unit economics. Below 1:1 means you're losing money on each customer.
Percentage of recurring revenue retained from existing customers, including expansion, contraction, and churn. NRR above 100% means your existing base grows revenue on its own - without acquiring a single new customer.
Benchmark: World-class SaaS achieves 120–130%+ NRR. Below 90% signals a serious retention problem.
Average monthly revenue generated per active customer. Rising ARPU signals successful upsells and expansion revenue; falling ARPU can indicate plan mix shifting toward lower tiers or pricing pressure from competitors.
Benchmark: Varies widely by segment. Track the trend month over month - consistent growth means your pricing is working.
Number of months needed to recover the cost of acquiring a customer through their recurring revenue. Shorter payback periods mean less working capital tied up in growth and faster path to profitability.
Benchmark: Under 12 months for B2B SaaS. Under 6 months for B2C SaaS. Over 18 months indicates capital-intensive, risky growth.
Additional MRR generated from existing customers through upgrades, seat additions, upsells, or cross-sells. Expansion MRR is the cheapest growth lever available - these customers already trust your product.
Benchmark: Top SaaS companies generate 20–40% of new MRR from expansion. Strong expansion is what pushes NRR above 100%.
The percentage of new users who reach your product's "aha moment" - the specific action that correlates most strongly with long-term retention. Activation is the earliest predictive signal for future churn.
Benchmark: Highly product-specific. Define your activation event first, then benchmark iteratively against your own baseline.
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Start Free with ChartsyCommon questions about SaaS and its key metrics.