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SaaS Key Metrics
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Monthly Recurring Revenue (MRR)
Indicates the predictable revenue generated by a SaaS company each month. Formula: MRR = (Number of customers) x (Average billed amount per customer)
Annual Recurring Revenue (ARR)
Represents the yearly predictable revenue stream. Formula: ARR = MRR x 12
Churn Rate
Measures the rate at which customers cancel their subscriptions. Formula: Churn Rate = (Number of customers lost in a period) / (Total number of customers at the start of the period)
Customer Acquisition Cost (CAC)
Shows the cost associated with acquiring a new customer. Formula: CAC = (Total cost of sales and marketing) / (Number of new customers acquired)
Lifetime Value (LTV)
Measures the total revenue expected from a customer over their entire relationship with the company. Formula: LTV = (Average revenue per account) x (1 / Churn Rate)
LTV to CAC Ratio
Assesses the relationship between the lifetime value of a customer and the cost to acquire them. Formula: LTV to CAC Ratio = LTV / CAC
Average Revenue Per Account (ARPA)
Shows the average monthly revenue generated per customer account. Formula: ARPA = (Total revenue) / (Number of accounts)
Customer Retention Cost (CRC)
Indicates the cost to keep an existing customer. Formula: CRC = (Total customer retention costs) / (Number of customers retained)
Free to Paid Conversion Rate
Measures the percentage of users who upgrade from a free to a paid version. Formula: Free to Paid Conversion Rate = (Number of users who upgrade) / (Total number of free users)
Gross Margin
Reflects the financial health by showing the percentage of total revenue that exceeds the cost of goods sold. Formula: Gross Margin = ((Total revenue - Cost of goods sold) / Total revenue) x 100
Net Promoter Score (NPS)
Measures customer loyalty and satisfaction based on their likelihood to recommend the service. No formula, scored on a scale from -100 to 100
Expansion MRR Rate
Tracks the additional revenue generated from existing customers through upsells and cross-sells. Formula: Expansion MRR Rate = (Additional MRR from existing customers) / (Total MRR at start of period)
Payback Period
Evaluates how long it takes for a company to recoup its investment in acquiring a customer. Formula: Payback Period = CAC / (MRR per customer x Gross Margin %)
Monthly Active Users (MAU)
Tracks the number of unique users who engage with the SaaS product within a month. No specific formula, but user engagement is tracked
Quick Ratio
Measures a company's ability to grow its MRR despite churn. Formula: Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
Trial Conversion Rate
Indicates the effectiveness of converting trial users into paying customers. Formula: Trial Conversion Rate = (Number of users who become paying customers after trial) / (Total number of trial users)
Customer Health Score
Assesses the overall satisfaction and product usage of customers. No standard formula, but combines various user activity and satisfaction metrics
Revenue Churn
Measures the loss of revenue due to canceled subscriptions or downgrades. Formula: Revenue Churn = (Revenue lost from downgrades and cancellations) / (Total revenue at start of period)
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