SaaS and subscription metrics: formulas and SQL
Metrics for recurring revenue, churn and retention. Small definition differences (monthly vs annual, logo vs revenue, gross vs net) change the answer a lot, so state which one you mean.
- Monthly Recurring Revenue (MRR)Monthly recurring revenue is the predictable subscription revenue you expect each month, normalised to a monthly amount.
- Annual Recurring Revenue (ARR)Annual recurring revenue is your recurring subscription revenue annualised, usually MRR multiplied by twelve.
- Customer Churn RateCustomer churn rate is the percentage of customers who cancel during a period, out of those you had at the start.
- Revenue Churn RateRevenue churn rate is the percentage of recurring revenue lost to cancellations and downgrades in a period.
- Net Revenue Retention (NRR)Net revenue retention shows how much recurring revenue you keep from existing customers after churn, downgrades and expansion.
- Gross Revenue Retention (GRR)Gross revenue retention is the share of starting recurring revenue you keep, ignoring any expansion.
- Average Revenue per User (ARPU)ARPU is the average recurring revenue per active customer or user in a period.
- Customer Lifetime Value (LTV)Customer lifetime value estimates the total gross profit a customer brings before they leave.
- LTV to CAC RatioThe LTV to CAC ratio compares what a customer is worth over their lifetime with what it costs to acquire them.
- CAC Payback PeriodCAC payback period is how many months of gross profit from a new customer it takes to recover the cost of acquiring them.
- SaaS Quick RatioThe SaaS quick ratio compares revenue added through new business and expansion with revenue lost to churn and contraction.
- Trial-to-Paid Conversion RateTrial-to-paid conversion is the share of free-trial users who become paying customers.
- Expansion MRRExpansion MRR is the additional monthly recurring revenue from existing customers who upgrade, add seats or buy more.
- Net New MRRNet new MRR is the change in monthly recurring revenue in a period: new and expansion revenue minus churn and contraction.