What are SaaS metrics?
SaaS metrics are the measures used to manage and value software-as-a-service and other subscription businesses. The core set covers size and growth, such as annual recurring revenue; retention, such as churn and net revenue retention; efficiency, such as customer acquisition cost payback and the burn multiple; and profitability, such as gross margin.
Also calledsubscription metricsSaaS KPIs
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- Growth
- ARR, net new ARR
- Retention
- Churn, NRR, GRR
- Efficiency
- CAC payback, burn multiple
How SaaS metrics work
Net revenue retention compares the recurring revenue from a group of customers today with a year ago, including upgrades, downgrades and cancellations; above 100% means existing customers are growing in value. Gross revenue retention counts only losses, so it cannot exceed 100%. Logo churn is the share of customers who leave. Customer acquisition cost, or CAC, is sales and marketing spend divided by new customers won; CAC payback is the number of months of gross profit needed to recover it. Lifetime value estimates the gross profit a customer generates before leaving. The burn multiple divides net cash burn by net new ARR. The Rule of 40 adds revenue growth and profit margin and compares the total with 40%. None of these are accounting measures, so definitions vary; companies should define each metric once and calculate it the same way every period, from billing and ledger data.
Common questions
What is net revenue retention?+
The recurring revenue from a group of customers at the end of a period, including expansion, contraction and churn, divided by their recurring revenue at the start. Above 100% means the existing base grew.
What is CAC payback?+
The number of months it takes for the gross profit from a new customer to repay the sales and marketing cost of winning them. Shorter payback means growth needs less cash.
What is the Rule of 40?+
A rule of thumb that a software company's revenue growth rate plus its profit margin, often an EBITDA or free cash flow margin, should be at least 40%.
Software that reports SaaS metrics
PigmentCollaborative business planning across finance and operations.Profile →
AbacumAutomated reporting and planning connected to operational data.Profile →
TabsContract terms driving billing, collections and revenue recognition.Profile →
RilletAI ERP for SaaS companies automating revenue recognition and close.Profile →Part of Accountio’s accounting technology coverage · Glossary
