SaaS Metrics
Definition
The set of key performance indicators specifically designed to measure the health, growth, and unit economics of Software-as-a-Service businesses. Core SaaS metrics include annual recurring revenue (ARR), monthly recurring revenue (MRR), customer acquisition cost (CAC), lifetime value (LTV), churn rate, net revenue retention (NRR), and the Rule of 40. These metrics are essential for SaaS company valuations.
Related Terms
Related FAQ
What is SaaS honesty about churn and retention?
SaaS founders often hide churn with misleading cohort definitions or optimistic assumptions. Honest churn: measured consistently, includes all customer segments, and accounts for seasonality.
Read full answer →How do intangible assets interact with valuation multiples?
Companies with strong intangible assets (brands, IP, data moats) command higher valuation multiples—e.g., 8-10x revenue versus 2-3x for commodity businesses.
Read full answer →What is expansion MRR and contraction MRR?
Expansion MRR is new revenue from existing customers (upsells, cross-sells, seat expansion). Contraction MRR is lost revenue from downgrades, seat reductions, or feature cancellations.
Read full answer →Put this knowledge to work
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