SaaS Metrics Guide: The 8 Numbers That Actually Matter
MRR. Churn. CAC. LTV. Runway. Burn rate. Gross margin. Contribution margin.
8 numbers. Most SaaS companies that fail, fail because they ignored 2 or 3 of them. Most SaaS companies that became benchmarks did so because they mastered all 8.
This guide covers each one — the formula, the real numerical example, the most common trap, and a link to the deeper post on the topic.
💡 Shortcut: want to see the 18 KPIs calculated automatically? Open the KPI Dashboard — fill in your data, get the indicators in 5 minutes.
1. MRR and ARR — recurring revenue
MRR (Monthly Recurring Revenue) is predictable subscription revenue in a month. Doesn't include setup fees, doesn't include one-off revenue, doesn't include one-shot upsells.
Formula: sum of all active subscriptions × monthly price of each.
Example: 100 paying customers at $200/month = MRR of $20,000.
ARR (Annual Recurring Revenue) is MRR × 12. The metric investors and the SaaS community use to compare companies. Operationally, MRR is what matters — it's the real monthly thermometer.
The most common trap: counting non-recurring revenue as MRR. Setup fees, paid onboarding, one-shot consulting — they don't count. If you count them, MRR is inflated and the burn calculated against it is wrong.
Read MRR explained in detail →
2. Churn — customers who leave
Customer Churn: % of customers who canceled in the period.
Simple formula: (Customers who canceled in the month / Active customers at start of month) × 100
Example: started the month with 100 customers, 5 canceled = 5% churn.
Revenue Churn: % of MRR lost from cancellations + downgrades in the period. More relevant metric than customer churn — because a big customer canceling weighs differently than a small one.
Typical benchmark:
- Customer churn below 5%/month = acceptable
- Below 2%/month = good
- Below 1%/month = excellent
The rule: high churn means the product doesn't deliver sustainable value. Marketing/sales don't compensate bad churn long-term. Solve churn before stepping on the gas.
Why customers are leaving: 5 real reasons →
3. CAC — cost of acquisition
CAC (Customer Acquisition Cost): how much the company spent to acquire each new customer.
Formula: (Total spent on sales + marketing in period) / (New customers acquired in same period)
Example: spent $50,000 on ads + $20,000 on sales team = $70,000 total. Acquired 100 customers. CAC = $700.
What goes into "spent":
- Salaries of people working in sales and marketing
- Commissions
- Ad investment
- Tools (CRM, automation, analytics)
- Lead-gen events
What does NOT:
- Product infrastructure cost
- Support for already-acquired customers
- General company operations
The trap: companies calculate CAC with paid media only and ignore salaries. CAC looks artificially low. When the sales team scales and CAC explodes, it looks like something broke — but it just got exposed.
4. LTV — customer value over time
LTV (Lifetime Value): total revenue an average customer generates during their full time with the company.
Basic formula: Avg Ticket × Gross Margin % × (1 / Monthly Churn)
Example: $200 ticket, 80% gross margin, 5% monthly churn (= customer stays on average 20 months).
LTV = $200 × 0.80 × 20 = $3,200
Direct relation with Churn: if churn is 5%/month, customer stays on average 1/0.05 = 20 months. Cutting churn from 5% to 2.5% doubles LTV (40 months instead of 20).
The most common trap: using annual churn instead of monthly without converting. Small difference crushes the calculation.
CAC vs LTV: the ratio that decides if you scale or bleed →
5. LTV/CAC and CAC Payback — machine efficiency
LTV/CAC ratio: shows whether acquisition investment is worth it.
| LTV/CAC | Diagnosis | |
|---|---|---|
| < 1:1 | Bleeding — losing money on each new customer | |
| 1:1 to 3:1 | Acceptable but thin — can break with small CAC increase | |
| 3:1 to 5:1 | Healthy — investing more in acquisition is rational | |
| > 5:1 | Maybe leaving growth on the table — invest more in sales |
CAC Payback: how many months until CAC is recovered.
Formula: CAC / (Avg Ticket × Gross Margin %)
Example: CAC $700, ticket $200, 80% margin → margin per month = $160 → Payback = $700 / $160 = ~4.4 months.
Typical benchmark: below 12 months is good. Below 6 months is excellent. Above 18 months is hard to finance without substantial capital.
LTV/CAC alone deceives — high ratio can hide long Payback. The two together tell the real story.
6. Burn Rate — how much the company spends
Burn Rate: how much the company "burns" in cash per month.
Gross Burn: all monthly expenses. As if revenue didn't exist.
Net Burn: expenses - revenue. What actually leaves the cash account.
Use Net Burn to calculate Runway. Use Gross Burn to understand operation cost.
Burn Multiple: Net Burn / Net New MRR (new MRR - MRR lost to churn).
| Burn Multiple | Diagnosis | |
|---|---|---|
| < 1 | Efficient — each $ of burn becomes more than $ of new MRR | |
| 1-2 | Reasonable | |
| 2-4 | Expensive — capital being spent without proportional return | |
| > 4 | Red alert |
How to calculate burn rate without falling into crisis →
7. Runway — how much time the company has
Runway: months until cash runs out at current burn.
Formula: Current Cash / Monthly Net Burn
Example: $1,200,000 in cash, $200,000/month burn = 6 months runway.
Practical rules:
- Runway < 6 months = strategic decision NOW (raise, cut, or sell)
- Runway 6-12 months = fundraising window (good rounds take 3-6 months)
- Runway 12-18 months = healthy, focus on growth
- Runway > 24 months = might be spending too little (or over-capitalized)
The biggest trap: using 3-month average burn without adjusting for growth. If you're hiring, burn will rise. Calculating Runway with old burn gives you the illusion of time you don't have.
How long can your business survive without new revenue →
3 levers to extend runway 90 days without raising →
8. Margin (Gross + Contribution) — what actually stays
Gross Margin: (Revenue - Direct Variable Cost) / Revenue.
In SaaS, direct variable cost = hosting (AWS, etc.) + payment processing + per-customer processing cost. Does NOT include product team salary, does NOT include marketing.
Healthy SaaS gross margin: 70-85%. Above 85% is excellent. Below 70% is a warning — likely too high infra cost or inefficient processing.
Contribution Margin: margin left after direct product costs + direct customer-serving costs (support, success).
The most common trap: confusing gross margin with real business margin. 80% gross margin doesn't mean 80% profit — you still need to subtract marketing, sales, general operations, salaries, taxes. Real (net) margin is usually much lower.
Gross margin vs net margin: which actually matters →
Contribution margin: why it matters more than profit →
Real profit calculator: 8 forgotten costs →
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Keep reading
Keep reading about KPIs
Gross Burn vs Net Burn: Which One to Use for Runway
Gross burn and net burn are two numbers — and both matter. Using the wrong one for runway distorts cash reality by months.
MRR vs ARR: The Real Difference and When to Use Each
MRR and ARR aren't the same metric viewed from different angles. They serve different functions — and using the wrong one distorts decisions.
Burn Rate Calculator: Find Yours in 5 Minutes
The number running while you're not looking. Gross vs net burn, the 7 items nobody adds, and why growth makes burn rise faster than revenue.
Frequently asked questions
Which SaaS metrics matter most early stage?
For a company in months 0-18: MRR, D30 New Customer Churn, CAC, LTV/CAC ratio, and Runway. MRR shows traction. D30 churn shows whether the product delivers. CAC and LTV/CAC show model viability. Runway shows how much time you have to fix things. ARR and CAC Payback come later.
Are MRR and ARR the same thing?
No. MRR is monthly recurring revenue. ARR is annual recurring revenue (usually MRR × 12). MRR is operational day-to-day. ARR is external communication (investors, SaaS community). SaaS operators look at MRR. Series A pitches show ARR. Same numbers, different audiences.
What's a healthy LTV/CAC for SaaS?
3:1 is the classic benchmark. Above 3 means you're investing well in acquisition. Below 3 is a warning. But the number doesn't live alone — it depends on CAC Payback (how long until CAC is recovered). LTV/CAC of 5 with 24-month Payback is worse than LTV/CAC of 3 with 6-month Payback. Cash matters.
How do I calculate runway correctly?
Runway = Current Cash / Monthly Burn Rate. Burn is a 3-month rolling average (not the worst month, not the best). If revenue is zero, that's Gross Burn. If there's revenue, use Net Burn (expenses - revenue). Recalculate runway monthly. 6-month runway isn't time to breathe — it's time to raise.
How many KPIs should a SaaS track?
Main dashboard: 5 to 7. No more. MRR, Churn, CAC, LTV, Runway are the core. Add 1-2 model-specific (NPS, D7 activation, etc.). Second-tier KPIs exist but don't live on the main dashboard — they get checked when something triggers an alert. A 30-KPI dashboard is one nobody reads.
Is high burn rate always a problem?
Depends on MRR Growth. $200K/month burn with MRR growing 30% MoM isn't a problem — it's investment. $200K/month burn with stagnant MRR is a fire. The deciding metric is Burn Multiple: Burn / Net New MRR. Below 1 is efficient. Above 2 is expensive. Above 4 is red alert.