SaaS Metrics Calculator
Created by: Daniel Hayes
Last updated:
Calculate essential SaaS metrics including MRR, ARR, customer lifetime value, LTV to CAC ratio, and churn analytics. Perfect for subscription businesses, SaaS companies, and investors analyzing recurring revenue performance and growth potential.
What are SaaS Metrics?
SaaS (Software as a Service) metrics are key performance indicators that help businesses track customer acquisition, retention, revenue growth, and overall business health. These metrics include Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Customer Lifetime Value (LTV), Customer Acquisition Cost (CAC), and churn rate.
Understanding and tracking these metrics is essential for SaaS businesses to make informed decisions about pricing, marketing spend, product development, and growth strategies. Investors and stakeholders also rely heavily on these metrics to evaluate company performance and potential.
SaaS Metrics Formulas
Monthly Recurring Revenue (MRR): MRR = Number of Customers × Average Revenue Per User (ARPU)
Annual Recurring Revenue (ARR): ARR = MRR × 12
Customer Lifetime Value (LTV): LTV = ARPU ÷ Churn Rate
LTV to CAC Ratio: LTV:CAC = Customer Lifetime Value ÷ Customer Acquisition Cost
Monthly Churn Rate: Churn Rate = (Customers Lost in Month ÷ Customers at Start of Month) × 100
Revenue per Customer: Revenue per Customer = Total Revenue ÷ Number of Customers
How to Calculate SaaS Metrics: Example
Example: A SaaS company has 500 customers paying an average of $100 per month, with a monthly churn rate of 5% and customer acquisition cost of $300.
Calculations:
• MRR = 500 customers × $100 = $50,000
• ARR = $50,000 × 12 = $600,000
• LTV = $100 ÷ 0.05 = $2,000
• LTV:CAC Ratio = $2,000 ÷ $300 = 6.67:1
This indicates a healthy business with strong customer lifetime value relative to acquisition costs and solid recurring revenue foundation.
Common Applications
- Investor Reporting: Demonstrate business health and growth potential to investors
- Strategic Planning: Set realistic growth targets and resource allocation
- Marketing Optimization: Determine appropriate customer acquisition spending
- Pricing Strategy: Optimize subscription pricing based on customer value metrics
Frequently Asked Questions
What is a good LTV to CAC ratio for SaaS businesses?
A healthy LTV:CAC ratio is typically 3:1 or higher, with 5:1 to 7:1 being excellent. Ratios below 3:1 may indicate unsustainable customer acquisition costs, while ratios above 10:1 might suggest under-investment in growth.
How often should I calculate SaaS metrics?
Core metrics like MRR and churn should be calculated monthly, while LTV and CAC can be reviewed quarterly. Regular tracking helps identify trends and make timely business adjustments.
What's the difference between gross and net MRR churn?
Gross MRR churn includes only revenue lost from cancellations, while net MRR churn accounts for expansions and contractions. Net churn can be negative if expansion revenue exceeds churn losses.
How do I improve my SaaS metrics?
Focus on reducing churn through better onboarding and customer success, increase ARPU through upselling, and optimize marketing channels to reduce CAC while maintaining quality leads.
Sources and References
- SaaS Capital, "SaaS Metrics Guide", SaaS Capital Research
- ChartMogul, "SaaS Metrics Refresher", ChartMogul Resources