SaaS Metrics: Definitions, Formulas and Benchmarks

Normalized monthly revenue from all active subscriptions. One-time fees and usage charges are excluded, so MRR shows predictable, recurring income at a glance.

MRR = Σ (active subscriptions × monthly price)

The annualized value of your recurring revenue - the standard metric for investor reporting, valuation and peer benchmarking.

ARR = MRR × 12

Average monthly revenue per active customer. Rising ARPU signals successful upsells; falling ARPU points to plan mix shifting down or pricing pressure.

ARPU = MRR ÷ Total active customers

The yearly value of a single customer contract, normalized across contract lengths so a three-year deal can be compared with a one-year one.

ACV = Total contract value ÷ Contract length in years

Average monthly revenue per active account rather than per user. For anything sold by the seat, it tells a very different story from ARPU.

ARPA = Total MRR ÷ Number of active accounts

The total value of contracts signed, before anything is invoiced or earned - the first of three numbers founders routinely conflate.

Bookings = Total contract value (TCV) at signing

MRR adjusted for what you already know is coming: signed upgrades not yet started, and cancellations not yet effective.

CMRR = Current MRR + Contracted future increases − Known scheduled decreases

How often subscriptions charge - and the mix of monthly against annual, which moves your churn, cash and payback more than pricing often does.

Annual plan share = MRR on annual plans ÷ Total MRR × 100

Additional MRR from existing customers through upgrades, seats, upsells and cross-sells - the cheapest growth lever you have.

Expansion MRR = MRR from existing customers this month − MRR from the same customers last month

How fast recurring revenue compounds month over month - the clearest read on whether the business is accelerating or stalling.

MRR Growth Rate = (MRR this month − MRR last month) ÷ MRR last month × 100

Total revenue expected from one customer over the whole relationship. LTV is the anchor for every acquisition and retention decision - it sets what you can afford to spend on CAC.

LTV = ARPU ÷ Monthly churn rate

The share of customers or revenue lost in a period. Customer churn counts people; revenue churn counts money - and one churned enterprise account can outweigh dozens of small ones.

Customer Churn = Churned customers ÷ Starting customers × 100

The share of recurring revenue retained from existing customers including expansion. Above 100% means the existing base grows on its own, with no new customers at all.

NRR = (Starting MRR + Expansion − Contraction − Churn) ÷ Starting MRR × 100

The state where expansion and reactivation revenue exceed everything lost to churn and downgrades - the existing base grows by itself.

Expansion MRR + Reactivation MRR > Churned MRR + Contraction MRR

The share of existing customers who stay across a period, excluding anyone acquired during it. Churn’s mirror image, stated as what you kept.

Retention Rate = (Customers at end − New customers) ÷ Customers at start × 100

The share of recurring revenue lost to cancellations and downgrades. It weights every loss by what it was worth, so it can look nothing like customer churn.

Gross Revenue Churn = (Churned MRR + Contraction MRR) ÷ Starting MRR × 100

How much recurring revenue you keep from existing customers before any expansion counts. It caps at 100%, and that ceiling is what makes it useful.

GRR = (Starting MRR − Churned MRR − Contraction MRR) ÷ Starting MRR × 100

Total sales and marketing spend divided by the new customers it produced. High CAC is fine if LTV is proportionally higher - the number only means something next to LTV and payback.

CAC = Total S&M spend ÷ New customers acquired

How many months of recurring revenue it takes to earn back the cost of acquiring a customer. Shorter payback means less capital tied up in growth.

Payback period = CAC ÷ (ARPU × Gross margin %)

The average value of the deals you close. It tells you which market you are actually selling to, which is often not the one you think.

ASP = Total new business value ÷ Number of new deals closed

How long a deal takes from first contact to closed-won. It sets how far ahead you must spend to grow, and how long a mistake takes to surface.

Average Sales Cycle = Total days to close (won deals) ÷ Number of won deals

Growth earned against growth lost: new plus expansion MRR weighed against contraction plus churn. It exposes businesses filling a leaking bucket.

Quick Ratio = (New MRR + Expansion MRR) ÷ (Contraction MRR + Churned MRR)

Growth rate plus profit margin should clear 40%. A heuristic for whether you are buying growth at a defensible price.

Rule of 40 Score = Revenue growth rate (%) + Profit margin (%)

How much cash you burn for every dollar of net new ARR. The bluntest available read on whether growth is efficient.

Burn Multiple = Net cash burned ÷ Net new ARR

How much new annualized revenue each dollar of sales and marketing spend produced. The sales-efficiency counterpart to burn multiple.

Magic Number = (Current quarter ARR − Prior quarter ARR) × 4 ÷ Prior quarter S&M spend

What is left of revenue after the cost of delivering the service. It decides whether revenue growth turns into a sustainable business.

Gross Margin = (Revenue − COGS) ÷ Revenue × 100

What remains of revenue after every cost, including interest and tax. In SaaS it is usually negative for years, and the reason it is negative is what matters.

Net Margin = Net income ÷ Revenue × 100

The share of trials that become paying customers - the earliest reliable signal of whether onboarding delivers the value you sold.

Trial-to-Paid = Trials converted ÷ Trials started × 100