Key SaaS Metrics to Track

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Before choosing a metric, understand your company’s goal. An early-stage startup might set customer acquisition and average revenue per customer as its primary goal. On the other hand, an organization preparing for an IPO or sale might have goals around cost efficiency, recurring revenue, or customer lifetime value.

Below are important SaaS metrics that organizations often use. Choose the most suitable one for you based on product type, business model, cost, growth stage, etc.

1. Monthly recurring revenue
The primary goal of any business is to make money. Monthly recurring revenue (MRR) helps track exactly that. It measures the sales/cash generated by the business on a monthly basis.

How to calculate MRR?
MRR is calculated by multiplying the number of users by how much they pay per month coo email list on average. Depending on the payment plans you offer, you may want to calculate annual recurring revenue (ARR) instead.

MRR = Number of active accounts x Revenue/subscription per account

If you are a SaaS-based calendar app selling to 100 customers at a subscription fee of $10/month, your MRR = 100x$10 = $1,000
If you charge $2 for each event scheduled on your calendar, your MRR would be the number of events per month x $2
And if you sell annual plans, divide the fee by 12 to get your MRR.
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monthly income dashboard with ClickUp

Why calculate MRR?
The SaaS model is based on acquiring a customer once and earning revenue from them over the long term. Therefore, MRR is the main indicator of the financial stability of a SaaS company.

If an organization can consistently generate MRR, it is considered successful and worth investing in. An upward trending MRR represents organizational growth.

Over time, this track record helps you accurately forecast revenue and effectively plan investments, staff, marketing budgets, etc.

How to improve MRR?
The easiest way to increase MRR is to acquire more customers. However, if you have a usage-based pricing model, you can also leverage customer success initiatives to help expand product usage to increase MRR.