Product-led growth · SaaS metrics
SaaS metrics: the few numbers that matter
SaaS metrics are the numbers that tell you if a subscription product is working. Start with six: monthly recurring revenue, churn, cost to win a customer, lifetime value, activation and time to value. You don't need a finance degree. You need to know what each one means and check it monthly.
The six SaaS metrics to track first
Monthly recurring revenue (MRR)
The income from subscriptions that repeats each month. The base number for everything else.
Churn
The share of customers who cancel in a month. High churn means a leaky bucket.
Customer acquisition cost (CAC)
What you spend on sales and marketing to win one new customer.
Lifetime value (LTV)
What one customer pays you, in total, before they leave.
Activation
The share of new sign-ups who reach their first real win.
Time to value
How long that first win takes. Shorter is better.
How the numbers fit together
David Skok, a venture capitalist whose "SaaS Metrics 2.0" guide is widely used, suggests lifetime value should be at least three times the cost to win the customer. Treat it as a rule of thumb, not a law.
LTV against CAC
If a customer is worth less than they cost to win, growth loses money. Fix that before you spend on ads.
Churn drives LTV
The longer people stay, the more each one is worth. Lower churn lifts lifetime value.
Activation drives churn
People who never get a first win are the first to cancel. Onboarding is where churn starts.
SaaS metrics when you sell a program
If you've sold a program by the cohort or by the hour, some of this is new. Here's how it maps.
From launches to months
Program income comes in bursts. Product income comes monthly. MRR is your new headline number.
From completion to churn
You used to track who finished. Now you also track who stays and keeps using it.
Add the AI cost
AI features cost money each time they run. Know the cost per user, and make sure your price covers it.
How to start tracking
- 01
Pick the six
Don't track thirty numbers. Start with the six above.
- 02
Define each one
Write down how you count it. Keep the rule the same every month.
- 03
Check it monthly
Same day each month. Look at the trend, not one data point.
- 04
Act on one
Choose the weakest number and work on it for the next month.
Your next step
The Software Plan Workshop
We work through the numbers with you before you build: price, AI running cost and what a customer needs to be worth.
- A written software plan
- A clickable prototype you can show people
- The first-version scope, ready to quote
- The $5,000 comes off the price of a build
- Price
- $5,000
- If you build with us
- Credited to the build
Fixed price. You know what to build and what it costs before you spend on a build.
★ Keep reading
More in the product-led growth guides
Product-led growth
The main guide: PLG for experts who sell a program.
Read more →Onboarding and time to value
How to lift activation and get a fast first win.
Read more →The freemium model
What free users cost and when they pay off.
Read more →Recurring revenue from your expertise
How to turn what you know into income that repeats.
Read more →What is a SaaS business model?
How subscription software makes money.
Read more →How to productise a service
Turn a custom service into something you can sell again and again.
Read more →Questions, answered
What are SaaS metrics?
SaaS metrics are the numbers that show how a subscription software business is going. The main ones are monthly recurring revenue, churn, customer acquisition cost and lifetime value.
Which SaaS metrics matter most early on?
Activation and churn. Before you worry about growth, check that new users reach a first win and that paying users stay. If those two are weak, more sign-ups won't help.
What is MRR?
MRR is monthly recurring revenue. It's the subscription income you can expect each month. One-off sales don't count.
What is churn?
Churn is the share of customers who cancel in a set time, usually a month. If you start the month with 100 customers and 5 cancel, your churn is 5%.
What is a good LTV to CAC ratio?
David Skok's "SaaS Metrics 2.0" guide suggests lifetime value should be at least three times customer acquisition cost. Treat it as a guide. What matters is that each customer earns you more than they cost to win.
Do I need SaaS metrics if I only have a few users?
Yes, but keep it light. With a few users, talk to each one and track two things: did they get a first win, and are they still using it a month later?