Startup Metrics Dictionary

Revenue Metrics

MRR Monthly Recurring Revenue

Total predictable revenue from active subscriptions in a month. The north star metric for subscription businesses.

Formula Sum of all active subscription values

Benchmark $10k MRR is a common early milestone. $100k MRR often indicates product-market fit.

Example 100 customers × $50/month = $5,000 MRR

ARR Annual Recurring Revenue

MRR × 12. Used for annual planning and valuation comparisons. Most common metric for reporting to investors.

Formula MRR × 12

Benchmark $1M ARR is a key milestone. Series A typically requires $1-3M ARR.

Example $50k MRR = $600k ARR

NRR Net Revenue Retention

Revenue retained from existing customers, including expansion and contraction. Shows if you grow even without new customers.

Formula (Starting MRR + Expansion - Churn - Contraction) / Starting MRR × 100

Benchmark 100% = stable. 110%+ = excellent. Top SaaS companies achieve 120-150%.

Example Started with $100k MRR, lost $10k to churn, gained $25k from upsells = 115% NRR

GRR Gross Revenue Retention

Revenue retained excluding expansion. Shows pure retention without upsells masking churn.

Formula (Starting MRR - Churn - Contraction) / Starting MRR × 100

Benchmark 85%+ is healthy. Below 80% indicates retention problems.

Example Started with $100k MRR, lost $10k to churn, $5k to downgrades = 85% GRR

ARPU Average Revenue Per User

How much each customer pays on average. Critical for unit economics.

Formula Total Revenue / Total Customers

Benchmark Varies wildly by market. Track trends over time, not absolute numbers.

Example $50k MRR / 500 customers = $100 ARPU

ACV Annual Contract Value

Average value of annual contracts. More relevant for enterprise sales.

Formula Total Contract Value / Contract Years

Benchmark SMB: $1-10k ACV. Mid-market: $10-100k. Enterprise: $100k+

Example 3-year contract worth $150k = $50k ACV

Customer Metrics

CAC Customer Acquisition Cost

Total cost to acquire one customer. Include all sales and marketing expenses.

Formula Total Sales & Marketing Spend / New Customers Acquired

Benchmark Varies by channel. Paid ads: $100-500 for SMB SaaS. Enterprise: $1,000-50,000.

Example Spent $10k on marketing, acquired 50 customers = $200 CAC

LTV Lifetime Value (also CLV)

Total revenue expected from a customer over their entire relationship.

Formula ARPU × Average Customer Lifetime (or ARPU / Churn Rate)

Benchmark LTV should be at least 3× CAC for a healthy business.

Example $100 ARPU, 5% monthly churn (20-month lifetime) = $2,000 LTV

LTV:CAC LTV to CAC Ratio

How much value you get per dollar spent on acquisition. The efficiency metric.

Formula LTV / CAC

Benchmark 3:1 is healthy. 5:1+ suggests underinvestment in growth. <3:1 is concerning.

Example $2,000 LTV / $500 CAC = 4:1 ratio

Churn Rate Customer Churn Rate

Percentage of customers who cancel in a given period.

Formula Customers Lost / Starting Customers × 100

Benchmark B2C: 5-7% monthly acceptable. B2B: <5% monthly, <10% annually is good.

Example Started with 100 customers, 5 cancelled = 5% monthly churn

Revenue Churn Revenue Churn Rate

Percentage of revenue lost to cancellations and downgrades. More accurate than customer churn.

Formula Revenue Lost / Starting Revenue × 100

Benchmark Can differ from customer churn if high/low value customers churn differently.

Example Lost $5k of $100k MRR = 5% revenue churn

CAC Payback CAC Payback Period

Months to recover the cost of acquiring a customer.

Formula CAC / (ARPU × Gross Margin)

Benchmark <12 months is healthy. <6 months is excellent. >18 months is dangerous.

Example $500 CAC / ($100 ARPU × 80% margin) = 6.25 months

Growth Metrics

MoM Growth Month-over-Month Growth

Percentage change from previous month. The primary growth indicator.

Formula (Current Month - Previous Month) / Previous Month × 100

Benchmark 10-20% MoM is strong early-stage growth. 5-10% is healthy for larger companies.

Example Grew from $50k to $55k MRR = 10% MoM growth

CMGR Compound Monthly Growth Rate

Smoothed growth rate over a period. Better than averaging monthly rates.

Formula (Ending Value / Starting Value)^(1/months) - 1

Benchmark 15%+ CMGR is exceptional. 10% = 3x annually. 5% = 1.8x annually.

Example Grew from $10k to $100k MRR in 12 months = 21% CMGR

Quick Ratio SaaS Quick Ratio

Growth efficiency: new revenue relative to lost revenue.

Formula (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)

Benchmark 4+ is excellent. 2-4 is good. <2 means churn is a serious problem.

Example ($10k new + $5k expansion) / ($3k churn + $2k contraction) = 3.0

Expansion Revenue Expansion MRR

Additional revenue from existing customers through upsells, cross-sells, or seat additions.

Formula Sum of revenue increases from existing customers

Benchmark Best companies get 30%+ of new MRR from expansion.

Example Customer upgrades from $100 to $200 plan = $100 expansion MRR

Efficiency Metrics

Burn Rate Monthly Burn Rate

Net cash spent per month. Negative burn (profitable) is the goal.

Formula Total Monthly Expenses - Total Monthly Revenue

Benchmark Depends on stage and runway. Track trends, not absolute numbers.

Example $80k expenses - $50k revenue = $30k monthly burn

Runway Cash Runway

Months until cash runs out at current burn rate.

Formula Cash on Hand / Monthly Burn Rate

Benchmark 18-24 months is comfortable. <12 months is urgent. <6 months is critical.

Example $500k cash / $30k burn = 16.7 months runway

Burn Multiple Burn Multiple

How much you burn for each dollar of new ARR. Efficiency of growth.

Formula Net Burn / Net New ARR

Benchmark <1 is excellent. 1-2 is good. >2 suggests inefficient growth.

Example $500k annual burn / $400k new ARR = 1.25 burn multiple

Rule of 40 Rule of 40

Growth rate + profit margin should exceed 40%. Balances growth and profitability.

Formula Revenue Growth Rate (%) + Profit Margin (%)

Benchmark 40+ is healthy. Top SaaS companies achieve 50-60+.

Example 30% growth + 15% margin = 45 (passing)

Gross Margin Gross Margin

Revenue minus direct costs (hosting, support). Not including sales/marketing/R&D.

Formula (Revenue - Cost of Goods Sold) / Revenue × 100

Benchmark SaaS: 70-85% is typical. <70% suggests infrastructure or support cost issues.

Example $100k revenue - $20k COGS = 80% gross margin

Magic Number SaaS Magic Number

Sales efficiency metric. How much new ARR per dollar of sales/marketing.

Formula Net New ARR / Previous Quarter Sales & Marketing Spend

Benchmark >1 = efficient, invest more. 0.5-1 = okay. <0.5 = fix before scaling.

Example $300k new ARR / $250k S&M spend = 1.2 magic number

Product & Engagement

DAU/MAU Daily/Monthly Active Users Ratio

Stickiness metric. What percentage of monthly users engage daily.

Formula Daily Active Users / Monthly Active Users × 100

Benchmark Social apps: 50%+ is excellent. SaaS: 20-30% is typical.

Example 1,000 DAU / 5,000 MAU = 20% ratio

Activation Rate Activation Rate

Percentage of signups that complete key onboarding actions.

Formula Users Who Completed Activation / Total Signups × 100

Benchmark Varies by product. 20-40% is common. Optimize ruthlessly.

Example 200 activated / 1,000 signups = 20% activation

NPS Net Promoter Score

Customer satisfaction and loyalty metric. Would they recommend you?

Formula % Promoters (9-10) - % Detractors (0-6)

Benchmark 0-30 = good. 30-70 = great. 70+ = exceptional.

Example 60% promoters - 20% detractors = 40 NPS

Time to Value Time to Value (TTV)

How long until a user experiences the core value of your product.

Formula Time from signup to first meaningful action/outcome

Benchmark Shorter is better. Minutes for simple tools, days/weeks for complex software.

Example User creates first project within 5 minutes of signup

Sales Metrics

Win Rate Sales Win Rate

Percentage of opportunities that convert to customers.

Formula Won Deals / Total Opportunities × 100

Benchmark 20-30% is typical. >40% might mean not prospecting enough.

Example 20 wins / 80 opportunities = 25% win rate

Sales Cycle Average Sales Cycle Length

Time from first contact to closed deal.

Formula Sum of days to close all deals / Number of deals

Benchmark SMB: 14-30 days. Mid-market: 30-90 days. Enterprise: 90-180+ days.

Example Average of 45 days from demo request to signed contract

Pipeline Coverage Pipeline Coverage Ratio

Pipeline value relative to quota. Do you have enough opportunities?

Formula Total Pipeline Value / Sales Quota

Benchmark 3-4x coverage is healthy. <2x is risky.

Example $400k pipeline / $100k quota = 4x coverage

MQL to SQL MQL to SQL Conversion

Marketing qualified leads that become sales qualified.

Formula SQLs / MQLs × 100

Benchmark 20-30% is typical. Higher suggests good lead quality or low bar for MQL.

Example 30 SQLs / 100 MQLs = 30% conversion

Put These Metrics to Work

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