SaaS Metrics Playbook: Subscription-Specific KPIs
The metrics that matter for subscription businesses—and how to use them to guide strategy.
You run a SaaS business.
Your metrics are different from e-commerce or agencies.
You need to track subscription-specific KPIs that predict business health.
This is the SaaS metrics playbook: The metrics every SaaS founder should know.
The Core SaaS Metrics
1. MRR (Monthly Recurring Revenue)
The revenue you expect to receive every month, assuming no change.
Calculation: (Number of customers) × (Average revenue per customer per month)
Example: 100 customers × $200/month = $20,000 MRR
This is your north star. Everything else flows from MRR.
2. ARR (Annual Recurring Revenue)
MRR × 12. Used for annual planning and investor conversations.
MRR: $20k → ARR: $240k
3. MRR Growth Rate
How fast is MRR growing month-over-month?
Month 1: $20k MRR Month 2: $21.5k MRR Growth rate: 7.5% MoM
Healthy SaaS growth: 5-10% MoM (compounds to 80-150% annual growth)
4. CAC (Customer Acquisition Cost)
How much do you spend to acquire a customer?
Total marketing + sales spend / New customers acquired = CAC
$10,000 spend / 10 customers = $1,000 CAC
5. LTV (Lifetime Value)
How much profit will you make from a customer over their lifetime?
LTV = (Monthly gross profit per customer) × (Expected lifetime in months)
$150 gross profit/month × 20 months = $3,000 LTV
6. LTV:CAC Ratio
The most important SaaS metric.
LTV / CAC = Ratio
$3,000 / $1,000 = 3:1
Healthy: 3:1 or higher Excellent: 5:1 or higher
7. CAC Payback Period
How long until a customer pays back their acquisition cost?
CAC / (Monthly gross profit per customer) = Months
$1,000 / $150 = 6.7 months
Healthy: 12 months or less Good: 6-9 months Excellent: 3-6 months
8. Churn Rate
What percentage of customers leave each month?
Customers at start of month: 100 Customers who left: 5 Monthly churn: 5%
Healthy: 3-7% monthly Good: 1-3% monthly Excellent: <1% monthly
Note: 5% monthly churn = 60% annual churn (compounds)
9. Net Revenue Retention (NRR)
What percentage of revenue from existing customers stays/grows?
Existing customer revenue at start: $100,000 Minus churn: -$5,000 Plus expansion: +$7,000 Ending revenue: $102,000 NRR: 102%
NRR > 100% is exceptional (customers expanding faster than churning)
10. Expansion Rate
What percentage of existing customers expand (upsell/cross-sell)?
Customers: 100 Customers who expanded: 15 Expansion rate: 15%
Healthy: 5-10% Good: 10-15% Excellent: 15%+
The SaaS Metrics Dashboard
Track these metrics monthly:
| Metric | Current | Target | Status |
|---|---|---|---|
| MRR | $20,500 | $22,000 | 🟡 (-7%) |
| MRR Growth | 4.2% | 7.5% | 🟡 Below target |
| Customers | 102 | 110 | 🟡 (-7%) |
| CAC | $1,100 | $1,000 | 🟡 Rising |
| CAC Payback | 7.2 mo | 6 mo | 🟡 Above target |
| LTV | $3,200 | $3,500 | 🟡 Declining |
| LTV:CAC | 2.9:1 | 3.5:1 | 🟡 Below target |
| Churn | 5.1% | 4% | 🔴 High |
| NRR | 103% | 110% | 🟡 Below target |
| Expansion rate | 12% | 15% | 🟡 Below target |
Red flags:
- Churn is high (5.1% vs. 4% target)
- CAC is rising
- LTV is declining
Investigation needed: Why is churn up? Is it a cohort issue? A product issue?
Cohort Analysis for SaaS
Track LTV by cohort (when customers signed up):
| Cohort | 3-Month LTV | 6-Month LTV | 12-Month LTV |
|---|---|---|---|
| Jan 2024 | $400 | $750 | $1,200 |
| Feb 2024 | $420 | $800 | $1,350 |
| Mar 2024 | $450 | $900 | $1,600 |
| Apr 2024 | $480 | — | — |
Trend: Later cohorts are stickier (higher LTV at same point).
This is good news. Your product is improving or onboarding is better.
Also track churn by cohort:
| Cohort | 3-Month Retention | 6-Month Retention | 12-Month Retention |
|---|---|---|---|
| Jan 2024 | 85% | 65% | 50% |
| Feb 2024 | 87% | 68% | — |
| Mar 2024 | 90% | — | — |
Trend: Better retention in later cohorts. Product improvements are working.
Unit Economics Framework
For each customer type:
Enterprise ($10k+ MRR):
- CAC: $5,000-10,000
- LTV: $100,000-500,000
- Payback: 8-15 months
- Expansion rate: 20%+ (high)
Mid-market ($1-5k MRR):
- CAC: $1,000-3,000
- LTV: $10,000-50,000
- Payback: 6-12 months
- Expansion rate: 10-15% (moderate)
SMB ($100-500/month):
- CAC: $200-1,000
- LTV: $2,000-10,000
- Payback: 3-8 months
- Expansion rate: 5-10% (low)
These are different businesses. Don’t mix them in one metric.
The SaaS Growth Equation
MRR Growth = New customer revenue + Expansion revenue - Churn revenue
Example:
- New customers (10 × $300): +$3,000
- Expansion (8 customers upgrading × $100): +$800
- Churn (5 customers × $200): -$1,000
- Net: +$2,800 (+14% MoM if starting at $20k)
To improve growth:
- Increase new customer acquisitions
- Increase expansion rate
- Decrease churn
Focus on whichever lever is weakest.
The SaaS Metrics at Different Stages
Early stage (PMF finding): Focus: Churn < 10%, Payback < 12 months Don’t obsess: Growth rate, NRR
Growth stage (scaling): Focus: MRR growth 10%+ MoM, Payback < 6 months Don’t obsess: Absolute MRR (yet)
Scale stage (optimizing): Focus: LTV:CAC > 3:1, NRR > 110%, Churn < 3% Don’t obsess: Month-to-month fluctuations
The Metrics Trap: What NOT to Optimize
Don’t optimize for:
-
Customer count alone
- 1,000 free users might generate $0 revenue
- 50 paid users at $1,000/month are better
- Track paying customer count, not total users
-
MRR at the expense of churn
- Offer discounts to acquire customers → Low CAC, high churn
- You’re trading sustainable revenue for short-term MRR
- Better: Sustainable MRR with low churn
-
Growth rate without unit economics
- “We’re growing 50% MoM!”
- If LTV:CAC is 1.5:1, you’re buying customers unprofitably
- Better: Sustainable growth with 3:1+ LTV:CAC
-
CAC payback alone
- “Our payback is 3 months!”
- If churn is 10% monthly, customers last ~10 months
- You only profit for 7 months (10 months - 3 month payback)
- Better: Consider LTV not just payback
The Monthly SaaS Ritual
Every month:
- Calculate MRR (starting point)
- Calculate MRR growth (are we accelerating or decelerating?)
- Analyze the growth equation (where did growth come from: new, expansion, or churn management?)
- Calculate cohort LTV (are newer cohorts stickier or less?)
- Calculate CAC payback (improving or degrading?)
- Flag issues (if churn is up or payback is up, investigate)
30 minutes. This is all you need.
The Red Flags
Watch for these in SaaS:
🔴 Red flag: Churn increasing
- Sign: Churn rose from 4% to 6%
- Problem: Might be temporary, might be systemic
- Action: Investigate by cohort, by feature usage, by segment
🔴 Red flag: CAC increasing while conversion rate stable
- Sign: CAC was $1,000, now $1,300
- Problem: Your cheapest channels are saturated, forced to buy expensive traffic
- Action: Diversify to organic/partnerships, or improve product so payback supports higher CAC
🔴 Red flag: LTV declining
- Sign: LTV was $5,000, now $4,000
- Problem: Churn is up or expansion is down
- Action: Investigate both
🟡 Yellow flag: Payback increasing above 12 months
- Sign: Payback was 6 months, now 10 months
- Problem: Either CAC increased or gross margin decreased
- Action: Investigate both
The Takeaway
SaaS metrics are predictive. They tell you if the business is healthy.
The core 10 metrics above are sufficient. Don’t track 50 metrics.
Track them monthly. Understand the changes. Act on red flags.
Focus on the metrics at your current stage (early: churn, growth: payback, scale: NRR).
We help you build SaaS metrics dashboards, analyze cohort trends, and use metrics to guide strategy.