SaaS Metrics That Actually Matter (and Why Founders Should Track Them Early)

‍

Most early-stage SaaS founders are laser-focused on building product and getting traction—which makes sense. But if you’re aiming to raise capital, manage your burn, or just build a healthy business, tracking a few key metrics early can go a long way.

‍

Here are the SaaS metrics we recommend every founder keep an eye on, even before hitting $1M ARR.

‍

1. Monthly Recurring Revenue (MRR)

‍

Why it matters: MRR is the heartbeat of your SaaS company. It tells you how much predictable revenue you’re generating each month.

‍

What to track:

‍

• New MRR – revenue from new customers
• Expansion MRR – upgrades, upsells, added seats
• Churned MRR – lost revenue from cancellations or downgrades

‍

💡 Investors will often ask for your MRR growth rate over the past 3-6 months. Keep it clean and consistent.

‍

‍2. Customer Acquisition Cost (CAC)

‍

Why it matters: CAC tells you how much it costs to acquire a paying customer. When paired with LTV (see below), it shows whether your growth is sustainable.

‍

How to calculate:

‍

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

🚩 Red flag: You’re spending more to acquire a customer than you’ll ever make back. CAC payback period is key.

‍

3. Customer Lifetime Value (LTV)

‍

Why it matters: LTV helps you understand how much revenue a customer generates over the duration of their relationship with you.

‍

How to calculate:

‍

LTV = (ARPU) × (Gross Margin %) × (Customer lifespan in months)

‍

Where ARPU = Average Revenue Per User

‍

🎯 A good rule of thumb: LTV should be at least 3x CAC.

‍

4. Gross Burn & Net Burn

‍

Why it matters: Burn is about survival. Gross burn is your total monthly spend; net burn is how much cash you’re actually losing after revenue.

‍

🧯 Tracking burn closely gives you clarity on your runway and helps you avoid “oh sht” moments.*

‍

Quick formula:

‍

• Gross Burn = Total expenses per month
• Net Burn = Gross Burn - MRR

‍

5. Runway

‍

Why it matters: Runway = how many months you have left before the money runs out.

‍

Formula:

‍

Runway = Cash on Hand / Monthly Net Burn

🚀 Founders should always know their runway. It’s one of the first numbers an investor will ask you.

‍

‍6. Churn Rate

‍

Why it matters: High churn kills growth. It’s more expensive to acquire new customers than to retain existing ones.

Types of churn to watch:

‍

• Customer churn – % of customers who cancel
• Revenue churn – % of revenue lost from those cancellations

‍

✅ Start tracking churn early, even at low volumes. Patterns emerge fast.

‍

‍7. ARR Growth Rate

‍

Why it matters: Annual Recurring Revenue (ARR) shows the pace at which you’re growing. If you’re raising a round, investors want to see ARR growing month-over-month.

‍

📈 Founders should benchmark their growth against stage-appropriate targets (e.g., 10–20% MoM for early-stage).

‍

8. Payback Period

‍

Why it matters: This is how long it takes for the revenue from a customer to pay back the cost of acquiring them.

‍

Formula: CAC / Monthly Gross Profit per Customer

🕒 Shorter = better. 12 months or less is a good goal.

‍

Final Thought: Clarity Breeds Confidence

‍

You don’t need a full-blown FP&A function or fancy dashboards to get started. But having clean books, tracking a few key metrics, and building basic financial hygiene can put you way ahead of the pack.

‍

If you’re juggling QuickBooks, a messy spreadsheet, and guesswork—let’s talk. We help early-stage SaaS founders build financial clarity that scales.

‍

Need help tracking these metrics or setting up a real budget?

‍

📩 Reach out—we’ll help you build the financial backbone your startup deserves.