A list of popular SaaS Key Performance Indicators and Metrics.
Net Monthly Recurring Revenue (MRR)
MRR is a measurement of the total predictable revenue you expect to make on a monthly basis.
Net MRR = New MRR + Expansion MRR – Churned MRR
- New MRR – MRR from new customers
- Expansion MRR – MRR from gained from existing customers when they upgrade their subscriptions
- Churned MRR – MRR lost from existing customers when they downgrade or cancel their subscriptions
Popular resources for MRR:
SaaS Quick Ratio
“The Quick Ratio of a SaaS company is the measurement of its growth efficiency. How reliable can a company grow revenue given its current churn rate? That’s the question the Quick Ratio metric answers.
To calculate your Quick Ratio you simply divide
new MRR by
lost MRR. The higher the ratio, the healthier the growth is at the company.” (From BareMetrics)
Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR)
Popular resources for Quick Ratio:
- What Is The Optimal Quick Ratio For Your SaaS Startup?
- SaaS Quick Ratio: How Efficient is Your Growth?
- The Proper Use of the SaaS Quick Ratio
Customer Acquisition Costs (CAC)
Cost to acquire a customer.
CAC = Cost of Sales & Marketing / New Customers
Customer Lifetime Value (LTV)
A prediction of the net profit attributed to the entire future relationship with a customer.
LTV = (Average Customer Revenue x Gross Margin %) / Customer Churn Rate
Measures the cost of acquiring a customer to the lifetime value. An ideal LTV:CAC ratio is 3 (your customer’s lifetime value should be 3x the cost to acquire them).
LTV:CAC = Customer Lifetime Value / Customer Acquisition Costs
Popular resources for CAC & LTV:
- Who does LTV Matter? (Google Sheet Template for calculating CAC & LTV)
- Customer Lifetime Value – The Only Metric That Matters
- What Most Companies Miss About Customer Lifetime Value
Percentage of customers you have lost from existing customers in a period.
Percentage of revenue you have lost from existing customers in a period.
Popular resources for Churn:
- How to Calculate Customer Churn and Revenue Churn
- What’s an Acceptable Churn Rate?
- How to Calculate SaaS MRR Churn Rate