SaaS Metrics Glossary
Essential SaaS metrics definitions. Understand MRR, churn, CAC, and other key metrics that drive software-as-a-service business success.
Revenue Metrics
Monthly Recurring Revenue (MRR)
Definition: Predictable monthly revenue from subscriptions
Formula: Sum of all monthly subscription fees
Why it matters: Primary indicator of SaaS business health and growth
Types: New MRR, Expansion MRR, Churned MRR, Net New MRR
Annual Recurring Revenue (ARR)
Definition: Annualized version of MRR
Formula: MRR × 12
Why it matters: Standard metric for SaaS valuation and growth tracking
Average Revenue Per User (ARPU)
Definition: Average monthly revenue per customer
Formula: MRR ÷ Total Number of Customers
Why it matters: Measures pricing effectiveness and customer value
Growth Metrics
Customer Acquisition Cost (CAC)
Definition: Total cost to acquire a new customer
Formula: Total Sales & Marketing Costs ÷ New Customers Acquired
Why it matters: Determines marketing efficiency
Best Practice: CAC should be recovered within 12 months
Customer Lifetime Value (LTV or CLV)
Definition: Total revenue expected from a customer over their lifetime
Formula: ARPU ÷ Churn Rate (or ARPU × Average Customer Lifespan)
Why it matters: Measures long-term customer value
LTV:CAC Ratio
Definition: Ratio of customer lifetime value to acquisition cost
Formula: LTV ÷ CAC
Why it matters: Indicates business sustainability
Benchmark: 3:1 or higher is healthy
CAC Payback Period
Definition: Time to recover customer acquisition cost
Formula: CAC ÷ (ARPU × Gross Margin %)
Why it matters: Measures cash flow efficiency
Benchmark: Under 12 months is ideal
Retention Metrics
Churn Rate
Definition: Percentage of customers who cancel in a period
Formula: (Customers Lost ÷ Starting Customers) × 100
Why it matters: Critical indicator of product-market fit and customer satisfaction
Benchmark: 5-7% monthly churn is acceptable for most SaaS
Retention Rate
Definition: Percentage of customers who remain active
Formula: 100% - Churn Rate
Why it matters: Inverse of churn, measures customer stickiness
Net Revenue Retention (NRR)
Definition: Revenue retention including upsells and expansions
Formula: ((Starting MRR + Expansion - Churn) ÷ Starting MRR) × 100
Why it matters: Measures growth from existing customers
Benchmark: 100%+ is excellent (growing from existing base)
Engagement Metrics
Daily Active Users (DAU)
Definition: Number of unique users active in a day
Why it matters: Measures daily product engagement
Monthly Active Users (MAU)
Definition: Number of unique users active in a month
Why it matters: Measures monthly product engagement
DAU/MAU Ratio (Stickiness)
Definition: Percentage of monthly users who use product daily
Formula: (DAU ÷ MAU) × 100
Why it matters: Measures product habit formation
Benchmark: 20%+ indicates strong engagement
Feature Adoption Rate
Definition: Percentage of users who use a specific feature
Formula: (Users Using Feature ÷ Total Users) × 100
Why it matters: Measures feature value and product-market fit
Product Metrics
Time to Value (TTV)
Definition: Time from signup to first meaningful action
Why it matters: Measures onboarding effectiveness
Onboarding Completion Rate
Definition: Percentage of users who complete onboarding
Why it matters: Predicts long-term retention
Activation Rate
Definition: Percentage of signups that reach activation milestone
Why it matters: Measures conversion from signup to active user
Quick Reference Table
| Metric | Abbreviation | Category |
|---|---|---|
| Monthly Recurring Revenue | MRR | Revenue |
| Annual Recurring Revenue | ARR | Revenue |
| Customer Acquisition Cost | CAC | Growth |
| Customer Lifetime Value | LTV / CLV | Growth |
| Net Revenue Retention | NRR | Retention |
| Daily Active Users | DAU | Engagement |
| Monthly Active Users | MAU | Engagement |
Track SaaS Success
These metrics are the foundation of SaaS analytics. Implement tracking and monitor your key performance indicators.