SaaS Metrics Glossary

Plain-language definitions for the subscription metrics every SaaS founder should know. Each entry includes formulas, examples, and benchmarks.

Monthly Recurring Revenue (MRR)

The predictable revenue a SaaS business earns each month from active subscriptions, normalized across billing intervals. MRR is the foundation metric for tracking subscription growth.

Annual Recurring Revenue (ARR)

The annualized value of recurring subscription revenue, calculated as MRR multiplied by 12. ARR is the standard top-line metric used by investors and boards to evaluate SaaS businesses.

Churn Rate

The percentage of customers or revenue lost over a given period. Churn rate measures how well a SaaS business retains its existing customer base and is critical for forecasting long-term growth.

Customer Lifetime Value (LTV)

The total revenue a business can expect from a single customer over the duration of their subscription. LTV helps determine how much you can spend on acquisition while remaining profitable.

The percentage of recurring revenue retained from existing customers after accounting for upgrades, downgrades, and churn. NRR above 100% means existing customers are generating more revenue over time.

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