SaaS metrics every founder must track (MRR, LTV, CAC)
If you can't measure it, you can't grow it. A simple guide to the north star metrics for SaaS success.
The SaaS Scorecard
We explain how to calculate and improve your LTV/CAC ratio and why MRR is only part of the story. Understanding these metrics is critical to building a sustainable business.
Monthly Recurring Revenue (MRR)
MRR is your baseline. Track new MRR, expansion MRR, contraction MRR, and churned MRR. Net MRR = New + Expansion - Contraction - Churn.
Customer Lifetime Value (LTV)
LTV = Average Revenue Per Account divided by Churn Rate. Aim for LTV 3x your CAC. Higher LTV provides more room for customer acquisition investment.
Customer Acquisition Cost (CAC)
CAC = Total Sales and Marketing Spend divided by New Customers Acquired. Include salaries, tools, and ad spend. Track CAC by channel for optimization.
LTV:CAC Ratio
This ratio determines your growth engine health. Below 1:1 means you are losing money. 3:1 is healthy. Above 5:1 may mean you are under-investing in growth.
Other Critical Metrics
Track: Gross Margin (should exceed 70%), Net Revenue Retention (above 100% indicates expansion revenue exceeds churn), and Payback Period (months to recover CAC).
Building Your Dashboard
Create a metrics dashboard updated daily. Share with your team. Set targets and track progress. Make decisions based on data, not intuition.
Sapterc Editorial Team
Expert insights on SaaS architecture, product management, and engineering.