SaaS metrics

SaaS metrics are specific metrics developed for evaluating, managing, and optimizing software-as-a-service companies. They measure business performance across the entire customer life cycle and enable data-driven decisions in this specific business model.

Meaning in detail Contact us now

What are SaaS metrics?

SaaS metrics are key figures, which capture the business performance of software-as-a-service companies. In contrast to traditional business models with one-time sales, SaaS companies focus on recurring revenue, long-term customer relationships, and continuous value creation. The metrics were developed to measure and optimize these specific aspects.

In SaaS companies, these metrics are particularly important because the subscription model requires continuous value creation to retain customers. The specific profitability metrics help to ensure long-term success, while more general business and data KPIs remain relevant as well.

Categories of SaaS metrics

SaaS metrics can be divided into different categories, each of which highlights different aspects of the business model:

Sales metrics: Focus on recurring income and its development
Customer loyalty and loss metrics: Measuring customer loyalty and churn
Growth metrics: Assessment of business dynamics and growth potential
Profitability metrics: Evaluation of the financial efficiency of the business model
Usage metrics: Analysis of actual product engagement

Key metrics in detail

Sales metrics

Monthly Recurring Revenue (MRR): Monthly recurring revenue — one of the most fundamental metrics for SaaS companies.
New MRR: MRR from new customers
Expansion MRR: Additional MRR through upgrades and cross-selling with existing customers
Contraction MRR: Loss due to downgrades of existing customers
Churned MRR: Loss due to canceled subscriptions
Net New MRR: New MRR + Expansion MRR - Churned MRR - Contraction MRR
Annual Recurring Revenue (ARR)): The annual recurring sales, typically MRR × 12 (see detailed ARR glossary article)

Customer loyalty and loss metrics

Customer churn rate: Percentage of customers who cancel in a given period
Revenue churn rate: Percentage of turnover lost as a result of cancellations
Gross MRR churn rate: Total loss of MRR before accounting for expansion MRR
Net MRR churn rate: ((Churned MRR + Contraction MRR) - Expansion MRR)/MRR at the beginning of the period
Net Negative Churn: Situation in which expansion MRR exceeds losses due to churned MRR — an indicator of sustainable growth
See also extensive article on Churn Rate and Decrease churn rate

Growth metrics

Lead Velocity Rate (LVR): Growth of qualified leads as an early indicator of future sales growth
Quick Ratio: (New MRR + Expansion MRR)/(Churned MRR + Contraction MRR) — values > 4 are often considered very good
Average revenue per account/user (ARPA/ARPU): Average revenue per customer, important for segmentation and pricing strategies

Profitability metrics

Customer Acquisition Cost (CAC): Costs of acquiring a new customer
CAC Payback Period: Time until customer acquisition costs are amortized
Customer Lifetime Value (CLV/LTV): Total value of a customer over the duration of the business relationship
LTV:CAC ratio: Relationship between customer lifetime value and acquisition costs — a ratio of 3:1 is often considered healthy
Gross Margin: (Total Sales - COGS)/Total Sales × 100
Rule of 40: Growth rate + profit margin should be at least 40%

Usage metrics

Activation rate: Percentage of users who reach a defined “aha moment”
Daily/Monthly Active Users (DAU/MAU): A measure of commitment and “stickiness” of the product
Net Promoter Score (NPS): Measuring customer satisfaction and loyalty

Data analysis of SaaS metrics

Effective use of SaaS metrics requires systematic data analysis. The Data Institute offers specialized support and tools for this:

Integration of various data sources: Linking data from product, CRM, finances and other systems
Business intelligence dashboards: Creating customized dashboards with trend analyses and forecasting models
Data Governance: Establishing uniform definitions and calculation methods across teams
Predictive analytics: Predictive models for churn risk, upselling potential, and customer value

The services provided by The Data Institute, such as our specialized BI solution, enable a transparent and action-oriented preparation of these metrics for various stakeholders in the company.

Benchmarks and targets

Depending on the business phase, pricing model, and target market, the benchmarks for SaaS metrics vary significantly:

Startup phase: Focus on growth metrics, CAC and early signs of product-market fit
Scale-up phase: Balanced balance of growth and unit economics (LTV:CAC, CAC Payback)
Maturity phase: Greater emphasis on profitability, net negative churn, and customer loyalty

The Data Institute can help you develop individual benchmarks that fit your specific SaaS business model and help you continuously optimize your SaaS metrics.

SaaS Metrics FAQ

How do SaaS metrics differ from traditional business metrics?
SaaS metrics focus on recurring revenue, customer loyalty, and long-term profitability, while traditional metrics are often based on one-time sales and short-term profitability.

Which metrics are most important for early SaaS startups?
Early startups should focus on activation rate, product-market fit indicators, CAC and focus early retention signals before moving on to more complex metrics such as LTV and Rule of 40.

How often should SaaS metrics be reviewed?
Leading metrics (e.g. lead velocity rate, activation rate) should be monitored weekly or even daily, while more comprehensive metrics (LTV:CAC, Rule of 40) are typically analyzed monthly or quarterly.