SaaS Metrics KPIs Cheat-Sheet

Running a SaaS business feels a lot like trying to fill a leaky bucket - you're constantly pouring in new customers while others slip out the bottom. The worst part? Most founders track vanity metrics that look impressive on paper but tell you nothing about whether your business will survive next quarter.

After watching too many startups crash and burn despite "hockey stick growth," I've learned that only a handful of metrics actually matter for SaaS survival. This guide walks through the numbers that predict whether you'll be celebrating or scrambling six months from now.

Critical revenue metrics for SaaS businesses

Understanding MRR and ARR

Let's start with the basics - Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR). These aren't just numbers to impress investors; they're your business's heartbeat. MRR tells you what's coming in each month, while ARR gives you the bigger picture of where you'll be in a year (assuming nothing changes, which it always does).

The tricky part about tracking MRR isn't the math - it's deciding what counts. Do you include that customer who's on a "temporary" 50% discount for six months? What about annual contracts paid monthly? Every SaaS company calculates these slightly differently, which is why comparing your metrics to competitors often leads to confusion. The folks over at Reddit's entrepreneur community have some solid discussions on standardizing these calculations.

What really matters is consistency in your own tracking. Pick a method and stick with it, because the trend matters more than the absolute number.

Impact of churn rate and gross margin

Here's where things get painful. Churn rate is the metric that keeps SaaS founders up at night, and for good reason. If you're losing 10% of customers monthly, you need to replace your entire customer base every 10 months just to stay flat. That's exhausting and expensive.

The SaaS metrics cheat sheet floating around startup forums puts it bluntly: anything above 5-7% monthly churn for B2C or 2% for B2B means you're in trouble. But here's what those guides don't tell you - churn hides in different places:

• Voluntary churn (customers who actively cancel)

• Involuntary churn (failed payments, expired cards)

• Downgrades (technically still customers, but worth less)

Gross margin is the other reality check. Sure, software has "unlimited" scale, but you still have real costs - servers, support staff, that expensive monitoring tool everyone swears by. A healthy SaaS gross margin sits around 70-80%. If you're below 60%, you're basically running a services company disguised as software. The founder-focused metrics template community has some eye-opening breakdowns of where SaaS costs actually hide.

Expansion MRR and Net Revenue Retention

This is where successful SaaS companies separate themselves from the also-rans. Expansion MRR - the additional revenue from existing customers - is pure gold because it costs nothing to acquire.

Think about it: convincing someone already using your product to pay $20 more per month is infinitely easier than finding a brand new $20 customer. The best SaaS companies generate 20-30% of new MRR from expansions. Lenny's Newsletter had a fantastic breakdown showing how companies like Slack and Zoom built empires on expansion revenue.

Net Revenue Retention (NRR) combines everything - new revenue from existing customers minus what you lost to churn and downgrades. An NRR above 100% means your customer base is growing in value even if you never sign another new customer. The magic number? 110% or higher for enterprise SaaS, 90%+ for SMB-focused products.

The FP&A community discussion highlights how finance teams obsess over NRR because it predicts long-term sustainability better than almost any other metric.

Operational efficiency and financial health

Now let's talk about the uncomfortable stuff - how fast you're burning cash and whether you'll make it to next year. Burn rate and runway aren't sexy metrics, but they determine whether you're building a business or running a countdown timer.

Your burn rate is simple: how much cash leaves your bank account each month. Your runway? Divide your bank balance by your burn rate. If that number is less than 12, start sweating. Less than 6? Time for drastic action. The startup KPI guide shares war stories of companies that ignored runway until it was too late.

EBITDA (yes, that mouthful stands for Earnings Before Interest, Taxes, Depreciation, and Amortization) strips away accounting tricks to show if your core business actually makes money. But here's the thing - most early-stage SaaS companies have negative EBITDA, and that's fine. You're investing in growth. The question is whether you're moving toward profitability or just digging a deeper hole.

Operating cash flow tells the real story. It's the actual cash your business generates, not the accrual accounting fiction that makes unpaid invoices look like money. The FP&A discussions reveal that finance teams track this religiously because it predicts whether you'll need another funding round.

The efficiency ratios that matter most:

• CAC Payback Period: How many months until a customer pays back their acquisition cost

• LTV/CAC Ratio: Should be 3:1 minimum (customer lifetime value vs acquisition cost)

• Sales Efficiency: New ARR generated per dollar of sales and marketing spend

These aren't just spreadsheet exercises. When your CAC payback stretches beyond 12 months, you're essentially giving investors an interest-free loan with their own money. The metrics cheat sheet has benchmarks, but every market is different.

Customer engagement and success metrics

Here's where metrics get fuzzy but incredibly important. Customer health scores try to predict who's about to churn before they actually leave. The basic idea? Track usage patterns, support tickets, and engagement to spot warning signs.

NPS (Net Promoter Score) and CSAT (Customer Satisfaction Score) feel like vanity metrics until you realize they predict renewal rates. The comprehensive KPI guide shows that a 10-point NPS improvement typically correlates with 2-3% better retention. Not earth-shattering, but it adds up.

Customer Lifetime Value (CLV) is where math meets reality. The formula is simple: average revenue per customer × gross margin × average customer lifespan. The challenge? That last variable is usually a guess for younger companies. The startup metrics discussions recommend using cohort analysis instead of company-wide averages - your customers from two years ago behave differently than ones who signed up last month.

What actually moves the needle on engagement:

• Feature adoption rate: What percentage use your key features within 30 days

• Time to first value: How quickly new users reach their "aha" moment

• Support ticket velocity: How fast issues get resolved (and whether they're increasing)

Statsig's team put together a solid framework for tracking feature-level metrics that predict retention. The key insight? Users who adopt 3+ core features in their first week are 80% more likely to still be around after a year.

Growth and market metrics

Let's get real about market metrics. TAM (Total Addressable Market) is usually a fantasy number designed to excite investors. SAM (Serviceable Addressable Market) gets closer to reality. But what actually matters is SOM - your Serviceable Obtainable Market, the slice you can realistically capture in the next 2-3 years.

The entrepreneurship forums are full of founders who thought they were targeting a $50B market, only to discover their actual addressable segment was more like $50M. Market share sounds impressive until you realize you might be dominating a tiny pond.

Daily and Monthly Active Users (DAU/MAU) tell you if people actually use what they're paying for. The DAU/MAU ratio - called stickiness - reveals usage patterns. A ratio of 50% means the average user engages 15 days per month. For B2B SaaS, anything above 40% is solid. For collaboration tools, you want 60%+. Statsig's product metrics guide breaks down benchmarks by category, which is way more useful than generic targets.

The sales pipeline metrics that actually predict revenue:

• MQL to SQL conversion: Marketing Qualified to Sales Qualified Lead rate (20-30% is healthy)

• SQL to Opportunity: How many qualified leads become real deals (50%+ for good product-market fit)

• Win rate: What percentage of opportunities close (25-30% for enterprise, higher for SMB)

• Sales cycle length: How long from first touch to closed deal

Track these weekly, not monthly. By the time monthly reports show problems, you've already lost a quarter. The KPI discussions emphasize that pipeline metrics are leading indicators - they tell you what revenue will look like in 3-6 months.

Closing thoughts

After all these metrics, here's the truth: you can't optimize what you don't measure, but you can definitely measure yourself to death. Pick 5-7 core metrics that align with your current stage and biggest challenges. If you're pre-product-market fit, obsess over activation and early retention. If you're scaling, focus on unit economics and efficiency ratios.

The best SaaS operators I know check their dashboard daily but only act on weekly trends. Monthly data drives strategy changes. Anything shorter is usually just noise that leads to knee-jerk reactions.

Want to dig deeper? The communities at r/SaaS and r/startups have running threads on metrics benchmarks. For more structured learning, the teams at Bessemer Venture Partners and OpenView regularly publish state-of-the-cloud reports with updated benchmarks.

Remember - these metrics are tools, not goals. The goal is building something customers love enough to pay for repeatedly. Everything else is just keeping score.

Hope you find this useful!