SaaSMetrics
SaaS businesses are unique, in that their success is very mathematical. Calculating and understanding these metrics will help you scale.
MRR
Monthly Recurring Revenue is the most important metrics for a SaaS business. It is a measure of a company's predictable revenue stream.
CAC
Customer Acquisition Cost is the total sales and marketing costs to earn a customer over time.
LTV
Lifetime Value indicates the total revenue a company can expect from a customer.
ARPA
Average Revenue per Account is a measure of how much revenue is generated per customer.
Churn
Churn is percentage at which customers cancel their subscription.
Magic Number
Sales Efficiency ratio, also known as the Magic Number, shows how efficiently a company is acquiring revenue.
Activation Rate
Measures the percentage of new users who take a specific desired action within a given timeframe after signing up.
Gross Margin
Shows what portion of the revenue is left after deducting the cost of goods sold (COGS)
North Star
Singular metric that captures the core value that the product delivers to customers. The exact NSM will differ depending on a company's unique value proposition and business model,