Track SaaS metrics including Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), Lifetime Value (LTV), and churn rate to measure business health and growth trajectory. These four metrics form the foundation of SaaS financial analysis.
Core SaaS Metrics
Monthly Recurring Revenue (MRR) represents predictable revenue from active subscriptions and directly indicates business momentum. Pair this with Annual Recurring Revenue (ARR) for longer-term planning.
Essential metrics to monitor:
- Customer Acquisition Cost (CAC) — Total sales and marketing spend divided by new customers acquired
- Customer Lifetime Value (LTV) — Total revenue expected from a customer over their relationship
- LTV:CAC Ratio — Should exceed 3:1 for sustainable growth
- Churn Rate — Percentage of customers canceling monthly (target: <5%)
- Net Revenue Retention (NRR) — Growth from existing customers through expansion and upsells
- Magic Number — (MRR growth × 4) / prior quarter marketing spend
Actionable Insights
Monitor these SaaS business health metrics weekly or monthly depending on company stage. Declining MRR signals customer satisfaction issues, while rising CAC without LTV growth indicates unsustainable unit economics. NRR above 100% demonstrates strong product-market fit and expansion revenue.
Use these metrics to guide product development, pricing strategy, and marketing investment decisions. Investors scrutinize these numbers heavily, making accurate tracking essential for fundraising.
