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The SaaS industry has become increasingly competitive in recent years, with countless digital solutions for businesses and consumers alike. As investor funding becomes more scarce, SaaS companies are shifting their focus away from growth-at-all-costs strategies and toward sustainable, long-term development. Leaders must make careful, data-driven decisions to win market share in this new tech environment.
Here, we’ll cover 15 essential SaaS performance metrics and show you how to use them to quantify your business’s health.
What Are SaaS Metrics?
SaaS metrics quantify specific aspects of your software business’s health using standardized formulas. You can use these metrics to monitor performance and optimize operations.
Unlike traditional business models, which can rely on standard financial KPIs, SaaS businesses don’t share universal success indicators. This makes it harder for leaders to determine which metrics matter. Some may prioritize user acquisition, whereas others focus on engagement and retention. The relevance of each metric depends on your company’s context: its growth stage, product maturity, pricing, GTM model, customer economics, and prevailing market conditions.
15 Top SaaS Metrics for Companies To Track
We’ve gathered 15 SaaS business metrics across six categories: revenue, customers, unit economics, efficiency, risk, and pipeline. Consider which B2C and B2B SaaS metrics support decision-making in the context of your business.
Revenue: How Much Money Are We Making?
Monthly recurring revenue (MRR), annual recurring revenue (ARR), and net new ARR are the primary SaaS finance metrics that indicate your business’s overall revenue health, predictability, and growth momentum.
1. Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR)
MRR measures how much you earn each month. ARR is similar but expressed as an annual rate.
Calculation:
MRR = Total monthly charges from all active subscriptions
ARR = MRR x 12
2. Net New Annual Recurring Revenue (Net New ARR)
Net new ARR measures total new recurring revenue minus churn and downgrades. By capturing net revenue changes, it provides a sound indication of growth momentum.
Calculation:
Net new ARR = (new ARR + expansion or upgrade ARR + reactivation ARR) – (churned ARR + downgrade or contraction ARR)
Customers: Are Users Joining, Using, and Staying?
Activation rates, customer churn, gross revenue retention (GRR), and net revenue retention (NRR) are all indications of your business’s capacity to attract, onboard, retain, and expand customer relationships.
3. Activation Rate
Activation rate is the percentage of new customers reaching their first value milestone within a specific period (weekly, monthly, etc). For example, you may measure the ratio of new CRM SaaS users who log their first sales opportunity within two weeks of onboarding. Activation rate is only valuable if you’ve identified milestones that translate into sustained product usage.
Calculation:
Activation rate = (new customers who reach the first-value milestone / total new customers in the period) x 100
4. Customer Churn
Customer churn is the percentage of customers who cancel their subscriptions within a specific period. For newer SaaS companies, a 5% monthly churn is generally considered normal. A significantly higher rate indicates underlying issues with product value, customer satisfaction, or market fit.
Calculation:
Customer churn rate = (customers lost during the period / customers at period start) x 100
5. Gross Revenue Retention (GRR)
GRR measures the percentage of recurring revenue your business retains from existing customers over a specific period — often monthly. It accounts for churn and downgrades while excluding expansion revenue.
GRR measures retention, not growth, meaning you won’t see a rate above 100%. The closer to 100%, the healthier your core customer revenue.
Calculation:
GRR = [(MRR at period start − churned MRR − downgraded MRR) / MRR at period start] x 100
6. Net Revenue Retention (NRR)
NRR is the percentage of recurring revenue you keep within a specified period after expansions, contractions, and churn. It indicates whether your customer base drives growth (NRR > 100%) or erodes it (NRR < 100%).
Calculation:
NRR = [(starting MRR + expansion MRR + new MRR − contraction MRR − churned MRR) / starting MRR] x 100
Unit Economics: Is Each Customer “Worth It”?
Customer acquisition cost (CAC), CAC payback periods, customer lifetime value (LTV), LTV:CAC ratios, and gross margins indicate the financial efficiency and long-term sustainability of your customer acquisition and retention strategies.
7. Gross Margin
Your gross margin is the percentage of revenue remaining after you subtract the direct costs of delivering your SaaS product. Many software companies are drawn to a SaaS model because of its potential for high scalability with low marginal costs. Leaders anticipate gross margins of 70% to 80%.
Calculation:
Gross margin (%) = [(total revenue – cost of goods sold) / total revenue] x 100
8. Customer Acquisition Cost (CAC)
CAC is the average amount you spend to acquire one new customer. Optimal CAC thresholds differ by customer segment, price point, and company maturity, so businesses should benchmark against similar SaaS peers to develop their goals.
Calculation:
CAC = total sales and marketing expenses in a given period / number of new customers acquired in that period
9. Customer Acquisition Cost (CAC) Payback Period
The CAC payback period is the average time it takes to recover the cost of acquiring a new customer through their recurring revenue. Industry-wide, CAC payback periods of 7–12 months are normal. A period beyond one year can indicate inefficient acquisition spend or insufficient customer lifetime value.
Calculation:
CAC payback period = CAC / (gross margin x MRR / number of accounts)
10. Customer Lifetime Value (LTV)
LTV tells you the total revenue you can expect from a customer over their entire relationship with your business. Although factors like discounting and churn spikes can skew data, LTV remains a helpful indicator of sustainable unit economics.
Calculation:
LTV = Average revenue per account x gross margin / customer churn rate
11. Customer Lifetime Value‑to‑Customer Acquisition Cost Ratio (LTV:CAC Ratio)
An LTV:CAC ratio tells you how much revenue you can expect from a customer relative to the cost of acquiring them. A result that’s less than one indicates you’re spending more on customers than you’re making from their business.
Calculation:
LTV:CAC ratio = LTV / CAC
Efficiency: How Wisely Do We Spend?
Burn multiple and the Rule of 40 indicate your company’s efficiency in converting spend into sustainable, profitable growth.
12. Burn multiple
Burn multiple tells you how many dollars of cash you “burn” to generate each net new dollar of recurring revenue over a given period — usually a quarter. For example, if you spend $2 million in a quarter and add $1 million in net new ARR, your burn multiple is 2.
Calculation:
Burn multiple = net cash outflow during the period / net new ARR generated during the same period
13. Rule of 40
The Rule of 40 states that your annual revenue growth rate and your profitability margin should add up to 40% or more. SaaS leaders typically measure yearly revenue growth rates with ARR and quantify profitability with the EBITDA (earnings before interest, taxes, depreciation, and amortization) margin.
You can calculate EBITDA by adding interest, taxes, depreciation, and amortization to net income. The EBITDA margin equation is EBITDA divided by total revenue, expressed as a percentage.
Falling below the 40% threshold generally indicates underperforming fundamentals; the business is not converting growth into profitable value. It can also suggest a conscious, margin‑suppressing investment phase or external growth headwinds, like market saturation or elevated churn, that are slowing top‑line expansion.
Calculation:
Rule of 40 = revenue growth rate (%) + profitability margin (%)
Risk: How Safe Is Our Revenue?
Measuring customer concentration gives insight into your business’s overall revenue stability and risk exposure.
14. Customer concentration
Customer concentration measures how much your total revenue depends on a few key clients. The heavier your dependence on these clients, the greater your revenue risk if one or more of them churn.
You can track customer concentration using the Herfindahl‑Hirschman Index (HHI):
Σ (customer revenue share)²
For example, if three customers account for 50%, 30%, and 20% of revenue, 0.5² + 0.3² + 0.2² = 0.38. An HHI close to 1 signals high concentration and greater revenue risk.
A more popular calculation method for SaaS businesses is:
Customer concentration (%) = (revenue from top customers / total revenue) x 100
Pipeline: Is Future Growth Lining Up?
LVR is a primary indicator of future business growth momentum.
15. Lead Velocity Rate (LVR)
LVR measures the month-over-month growth rate of qualified sales leads. Tracking sales this way gives you an indication of future revenue growth potential and the health of your sales pipeline.
Calculation:
LVR (%) = [(current month’s qualified leads – last month’s qualified leads) / last month’s qualified leads] x 100
Leveraging SaaS Metrics for Business Growth
SaaS companies that effectively analyze and apply these metrics gain valuable insights that can drive and optimize growth. With the right tools, your business can turn sales data into strategic action.
Rox is at the forefront of sales AI, reimagining how SaaS teams work and grow. This Agentic CRM platform integrates natively with popular solutions like Salesforce and Zendesk to centralize your data. It uses advanced AI agent swarms to autonomously track meaningful metrics, gauge sentiment, and present engagement opportunities.
Create a free account today to see how our AI automation can help you manage SaaS performance metrics and empower your sales team.
