SaaS KPIs & Metrics Every Company Should Track

How do you measure the performance of your SaaS business? What benchmarks do you use to see whether you’re on the right track?

Many SaaS founders struggle to track the success of their products. Data availability isn’t the problem, as product analytics platforms are capable of measuring just about anything.

The secret lies in selecting the right key performance indicators or KPIs. Using the right metrics can help you unlock insights into everything from customer engagement to marketing campaign performance.

In this guide, we’ll cover the 12 most important SaaS KPIs — from revenue metrics like ARR and MRR to efficiency benchmarks like the Rule of 40 and burn multiple. Each section includes the formula, benchmarks, and what the metric tells you about your business.

What is a SaaS KPI? Why do we track them?

Key Performance Indicators (KPIs) are metrics that inform SaaS businesses about how well their product is performing. This can be either a high-level view of the entire company’s performance or a specific look at how well a department is contributing to business goals.

KPIs help guide business decision-making by providing robust feedback mechanisms on company performance. They set themselves apart from other, more general metrics by being laser-focused on business objectives.

SaaS founders can use KPI optimization to achieve company goals such as increasing market share, boosting revenue, growing their user base, and improving their SaaS valuation.

What makes a good SaaS KPI?

We recommend following the SMART framework when assessing which metrics to track:

• Specific: Does the metric refer to a specific quality or fact about your SaaS product?
• Measurable: Can you effectively measure this metric with your analytics tools?
• Attainable: Can you conceivably influence this metric? How difficult is it to improve?
• Relevant: Is the metric relevant to your business objectives?
• Time-Bound: Can this metric be defined and measured over a specific time period?

Not every KPI will meet all of these requirements. But metrics that fit this framework will have a better chance of being aligned with actionable goals.

Revenue KPIs

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable, stable monthly revenue stream for your SaaS business. Because SaaS companies use subscription-based models, MRR is straightforward to calculate:

MRR = Number of Subscribers × Average Revenue Per User (ARPU)

MRR can be broken down into categories for deeper analysis:

• New MRR: Revenue gained from new customers
• Expansion MRR: Revenue from existing customers who upgrade their subscriptions or purchase add-ons
• Downgrade MRR: Revenue lost from existing customers downgrading their plan
• Churned MRR: Revenue lost from customers who cancel entirely

This gives you a more nuanced formula:

MRR = Previous MRR + New MRR + Expansion MRR − Downgrade MRR − Churned MRR

MRR is so predictable that lenders offer SaaS companies capital based on their recurring revenue. With Founderpath, you can turn your predictable MRR into significant cash advances to grow your business — without giving up equity.

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is the annualized version of MRR. It represents the predictable revenue your SaaS business expects to generate over the next 12 months based on current subscriptions.

ARR = MRR × 12

ARR is the metric investors care about most when evaluating SaaS companies. It’s the standard benchmark for company size and growth stage:

• < $1M ARR: Early stage
• $1M–$10M ARR: Growth stage
• $10M+ ARR: Scale stage

ARR is also a key input for SaaS valuation multiples — most acquirers and investors value SaaS businesses as a multiple of ARR. Typical multiples range from 3–5x for slow-growth companies to 10–20x+ for high-growth SaaS with strong retention.

Average Revenue Per User (ARPU)

Average Revenue Per User (ARPU) measures how much an average customer spends on your product during a specific time period. If you have multiple products, comparing ARPUs can give you a quick overview of which are more valuable.

ARPU = Total Revenue / Total Number of Users

ARPU is used as a component of other KPIs (like CLV and CAC payback) and is a useful metric for tracking pricing effectiveness over time.

Retention & Churn KPIs

Customer Churn Rate

Customer churn rate represents the percentage of customers who stop using your SaaS product during a given time period. In a subscription business, retaining customers is critical — the cost of acquiring new customers is high, so a startup that converts but fails to retain will burn through cash quickly.

Customer Churn Rate = (Customers Lost During Period / Customers at Start of Period) × 100

Losing some customers is natural. But high monthly churn rates (above 5% for SMB SaaS or above 1% for enterprise SaaS) suggest that users’ needs aren’t being met. Common causes include:

• Poor onboarding that leaves new customers confused
• Website performance and stability issues
• Lack of new features and functionality
• Pricing that’s too high relative to perceived value

Revenue Churn Rate

Not all customers are equally valuable. Customer churn alone doesn’t reveal how much revenue is leaking out. If your enterprise-tier customers are leaving, that may not register as a significant customer churn problem — but it devastates your revenue.

Revenue Churn Rate = (MRR Lost from Existing Customers / MRR at Start of Period) × 100

If you offer multiple tiers with upgrades and downgrades, use the net version:

Net Revenue Churn = (Churned MRR + Downgrade MRR − Expansion MRR) / MRR at Start of Period × 100

A negative net revenue churn is the gold standard — it means expansion from existing customers more than offsets losses from churn and downgrades.

Net Revenue Retention (NRR)

Net Revenue Retention (also called Net Dollar Retention or NDR) is the flip side of revenue churn — it measures how much revenue you keep and grow from existing customers over a given period, without counting new customers.

NRR = (Starting MRR + Expansion MRR − Contraction MRR − Churned MRR) / Starting MRR × 100

An NRR above 100% means your existing customers are spending more over time — through upgrades, seat expansion, or cross-sells — than you’re losing to churn and downgrades. This is widely considered the “holy grail” of SaaS metrics.

NRR benchmarks by stage:

• < 90%: Concerning — you’re shrinking without new sales
• 90%–100%: Healthy — manageable churn
• 100%–120%: Strong — your product has natural expansion
• > 120%: Elite — companies like Snowflake and Datadog operate here

Public SaaS companies with NRR above 130% consistently trade at premium valuations, making this one of the most important metrics to optimize.

Unit Economics KPIs

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) measures how much your SaaS business spends to acquire a single new customer. It’s the per-unit cost of your marketing and sales efforts.

CAC = Total Sales & Marketing Spend / Number of New Customers Acquired

CAC reveals the effectiveness of your marketing campaigns. A high acquisition cost often means a low conversion rate. Are your campaigns tailored enough? Are you using the most effective channels for your target audience?

Tracking CAC by channel (paid search, content, outbound, referrals) helps you identify which acquisition strategies deliver the best ROI.

Customer Lifetime Value (CLV/LTV)

Customer Lifetime Value (CLV or LTV) describes the total amount a customer is expected to spend over the lifetime of their subscription.

First, estimate how long customers stay subscribed on average:

Average Customer Lifetime = 1 / Monthly Churn Rate

Then calculate CLV:

CLV = ARPU × Average Customer Lifetime

CLV helps you measure the return gained through marketing and sales — it’s how much value is created by acquiring one new customer. A low CLV can be caused by high churn or may indicate your pricing is too low.

CLV:CAC Ratio

Combine CLV and CAC to find the true unit economics of your SaaS business:

• CLV measures how much you gain from a customer
• CAC measures how much you spend to acquire a customer

CLV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost

For example, if you spend $450 to acquire a customer who will spend $1,350 throughout their lifetime, your CLV:CAC ratio is 3:1.

How to interpret the result:

• 1:1 — You’re spending as much to acquire as you earn. You’re likely losing money after overhead. You need to either reduce CAC or improve CLV through upselling.
• 3:1 — The industry “golden ratio.” This suggests a 300% ROI on acquisition spend.
• > 5:1 — In early-stage startups, a very high ratio often means you’re underinvesting in marketing. You can afford to spend more to fuel growth.

CAC Payback Period

CAC Payback Period measures how many months it takes to recoup the cost of acquiring a customer. While CLV:CAC tells you the total return, payback period tells you how quickly you see that return.

CAC Payback (months) = CAC / (ARPU × Gross Margin %)

Industry benchmarks:

• < 12 months: Excellent — fast payback, efficient growth
• 12–18 months: Good — standard for most SaaS companies
• 18–24 months: Acceptable for enterprise SaaS with long contracts
• > 24 months: Risky — you’re investing heavily with slow returns

A shorter payback period means you can reinvest in growth faster. If your CAC payback exceeds 18 months, consider optimizing your sales funnel, adjusting pricing, or improving conversion rates.

Growth Efficiency KPIs

Burn Rate & Burn Multiple

Burn rate measures how quickly your company spends cash. There are two types:

• Gross burn rate = Total monthly operating expenses
• Net burn rate = Total monthly expenses − Total monthly revenue

Burn multiple (popularized by Bessemer Venture Partners) measures the efficiency of your growth — how much cash you burn to generate each dollar of new ARR:

Burn Multiple = Net Burn / Net New ARR

A lower burn multiple means more efficient growth:

• < 1x: Amazing efficiency
• 1x–1.5x: Good
• 1.5x–2x: Average
• > 2x: Cause for concern

Your cash runway — how many months until you run out of money — is calculated as:

Runway (months) = Cash on Hand / Net Burn Rate

If your runway is getting short, non-dilutive funding options like revenue-based financing can extend it without giving up equity.

Rule of 40

The Rule of 40 is a widely-used benchmark that combines growth and profitability into a single number:

Rule of 40 Score = Revenue Growth Rate (%) + Profit Margin (%)

If your combined score is 40 or above, your business is generally considered healthy. For example:

• 50% growth + 0% margin = 50 (passes)
• 20% growth + 25% margin = 45 (passes)
• 30% growth + 5% margin = 35 (does not pass)

The Rule of 40 acknowledges that slower growth is acceptable if paired with strong margins — and vice versa. Companies consistently above 40 command premium valuation multiples, and many public SaaS companies use it as a key internal metric. It’s also a metric investors increasingly use to evaluate SaaS growth rates in context.

Related SaaS Metrics Guides

Dive deeper into each metric with our detailed guides:

• SaaS Multiples & Valuation: How investors value SaaS companies and what drives premium multiples
• SaaS Growth Rate: Benchmarks, formulas, and proven tactics to accelerate growth
• Revenue Based Financing: How RBF works and why SaaS founders choose it over equity
• Non-Dilutive Funding Options: 8 ways to fund your SaaS without giving up equity
• SaaS Financial Statements: A founder’s guide to P&L, balance sheet, and cash flow
• SaaS Accounting Guide: Revenue recognition, metrics, and best practices

Track Your SaaS KPIs with Founderpath

These 12 KPIs are essential for measuring and growing your SaaS business. If you’re just getting started, focus on three metrics first:

• MRR — your core revenue pulse. Grow your MRR and you’re likely seeing an equal rise in your bottom line.
• Churn rate — your primary barrier to growth. High churn means you’re filling a leaky bucket.
• CLV:CAC ratio — your unit economics health check. If this ratio is below 3:1, either your acquisition is too expensive or your retention needs work.

Once you have these metrics dialed in, you can explore funding based on your metrics — many non-dilutive lenders use MRR, churn, and LTV to determine how much capital you qualify for.

At Founderpath, we’ve built a free reporting tool to capture your business metrics. And if you’re looking to turn your strong KPIs into growth capital, you can get non-dilutive funding based on your recurring revenue — no equity dilution, no board seats, no warrants.

Get started with Founderpath and see how much you qualify for.