# SaaS metrics in 2026, formulas, examples and benchmarks for 12 KPIs

> SaaS metrics explained with formulas, worked examples and sourced benchmarks for MRR vs ARR, churn rate, net revenue retention, LTV to CAC and payback.

By Gabriel Toledano, CEO and co-founder of Hikoo. Updated 2026-10-28. SaaS Software Review, https://saassoftwarereview.com/en/saas-metrics

## Key takeaways

- MRR is monthly recurring revenue, ARR is MRR times 12. Both exclude one-off fees, services and usage you cannot count on.
- Private B2B SaaS companies had a median net revenue retention of 101% and a median gross revenue retention of 91% in SaaS Capital's 2025 survey of more than 1,000 companies.
- Monthly logo churn falls as price rises. ChartMogul measured a median of 6.1% for accounts paying under $25 a month and 2.2% above $500.
- An LTV to CAC ratio above 3 and a CAC payback under 12 months for SMB customers are the most quoted targets, from David Skok and Bessemer.
- The Rule of 40 is hard to reach. BCG found that 26% of software companies above $80 million in revenue beat it in 2025, and 9% of those under $30 million.

SaaS metrics are the dozen numbers that show whether a subscription business grows efficiently. The core set is MRR and ARR, logo and revenue churn, net and gross revenue retention, LTV, CAC, the LTV to CAC ratio, CAC payback, the Rule of 40 and the burn multiple. Each has a standard formula and published benchmarks, collected below with a worked example.

The examples all use one hypothetical B2B SaaS company, so you can follow how the metrics connect. It starts the month with 200 customers paying an average of $250 a month, a gross margin of 80% and a sales and marketing budget of $60,000 a month.

| Metric | Formula | Benchmark | Source |
|---|---|---|---|
| MRR | Sum of monthly recurring revenue from active subscriptions | Median ARR growth of 24% for private B2B SaaS above $1M ARR (2025) | SaaS Capital |
| ARR | MRR × 12 | ARR growth of 15% in 2024, 20% expected in 2025 | KeyBanc and Sapphire Ventures |
| Logo churn | Customers lost in period / customers at start | Median monthly 6.1% (under $25 ARPA) to 2.2% (over $500) | ChartMogul, 2022 |
| Revenue churn | (Churned + contraction MRR) / MRR at start | Good monthly churn of 2.5% to 5% (SMB), 1% to 2% (enterprise) | ProfitWell data, 2022 |
| Net revenue retention | (Start ARR + expansion − contraction − churn) / start ARR, same cohort | Median 101% (2025) | SaaS Capital |
| Gross revenue retention | (Start ARR − contraction − churn) / start ARR | Median 91%, 95% above $250k ACV (2025) | SaaS Capital |
| LTV | ARPA × gross margin / churn rate | Use with CAC, see below | David Skok |
| CAC | Sales and marketing cost / new customers | Use with LTV and payback | David Skok |
| LTV to CAC | LTV / CAC | Above 3 | David Skok |
| CAC payback | CAC / (new MRR per customer × gross margin) | Under 12 months SMB, 18 mid-market, 24 enterprise | Bessemer, 2021 |
| Rule of 40 | Revenue growth % + profit margin % | Beaten by 26% of companies above $80M revenue (2025) | BCG |
| Burn multiple | Net burn / net new ARR | 2x reasonable early on, 3x or more a warning | David Sacks, 2020 |

## What are MRR and ARR?

MRR (monthly recurring revenue) is the subscription revenue a SaaS company can expect every month, and ARR (annual recurring revenue) is the same figure on a yearly basis. Both count only recurring revenue. One-off setup fees, consulting days and unpredictable overage stay out.

### How do you calculate MRR?

Add the monthly value of every active subscription, converting annual and quarterly plans to a monthly amount. A customer paying $3,000 a year counts as $250 of MRR, whatever the invoicing schedule.

Most teams also split MRR into its movements, since the total hides what happened. In our example month the company starts at $50,000 and records these changes.

| MRR movement | Amount |
|---|---|
| Starting MRR | $50,000 |
| New MRR (20 new customers at $250) | +$5,000 |
| Expansion MRR (upgrades, extra seats) | +$2,000 |
| Contraction MRR (downgrades) | −$500 |
| Churned MRR (6 customers lost) | −$1,500 |
| Ending MRR | $55,000 |

Net new MRR is $5,000, the sum of the four movements. That figure feeds the burn multiple further down.

### MRR vs ARR, what is the difference?

ARR is MRR multiplied by 12, so the example company's $55,000 of MRR equals $660,000 of ARR. The choice between them is about how you sell. Companies with monthly plans and small customers usually manage the business on MRR, because changes show up month by month. Companies with annual contracts and larger customers report ARR, which matches how they sign and renew.

Investors in later rounds generally talk in ARR. Keep both consistent, and never annualize a single exceptional month or include services revenue to reach a round number.

## How do you calculate churn rate?

Churn rate is the share of customers or revenue you lose over a period. Divide what was lost during the period by what you had at the start, and keep customer churn and revenue churn separate, because they tell different stories.

### What is logo churn?

Logo churn, or customer churn, counts lost customers. The example company lost 6 of its 200 customers in the month, a logo churn of 3%.

Monthly churn compounds over a year. Use 1 − (1 − monthly rate)^12 to annualize it, which turns 3% a month into about 31% a year. [ChartMogul's analysis](https://chartmogul.com/blog/good-customer-churn-rate/) of its customers' data from late 2021 found a median monthly customer churn of 6.1% for accounts paying under $25 a month, falling to 2.2% for accounts above $500. The same study measured about 6.5% for companies under $300,000 of ARR and around 3.7% at $1 million to $3 million.

As a target, [ProfitWell data published by Lenny Rachitsky](https://www.lennysnewsletter.com/p/monthly-churn-benchmarks) in February 2022, based on 13,000 SaaS companies, rates 2.5% to 5% monthly churn as good for SMB and mid-market B2B SaaS and under 1.5% as great. For enterprise, good is 1% to 2% and great is under 0.5%.

### What is revenue churn?

Revenue churn, or gross MRR churn, measures recurring revenue lost to cancellations and downgrades. In the example, $1,500 of churned MRR plus $500 of contraction against $50,000 at the start gives a gross revenue churn of 4% for the month.

Net revenue churn subtracts expansion. Here, $2,000 of expansion exactly offsets the $2,000 lost, so net MRR churn is 0%. Once expansion is larger than losses, net churn turns negative, which is the monthly version of a net revenue retention above 100%.

## What is net revenue retention?

Net revenue retention (NRR) is the share of recurring revenue you keep from a group of customers after 12 months, including their upgrades, downgrades and cancellations. It excludes revenue from new customers, which is what makes it a clean read on product value and expansion.

The formula is (starting ARR + expansion − contraction − churn) / starting ARR, measured on the same cohort. Say the customers active a year ago brought $480,000 of ARR. Since then they added $72,000 through upgrades, lost $12,000 to downgrades and $43,200 to cancellations. NRR is $496,800 / $480,000, or 103.5%.

[SaaS Capital's 2025 survey](https://www.saas-capital.com/wp-content/uploads/2025/09/RB32WS1-2025-B2B-SaaS-Retention-Benchmarks.pdf) of more than 1,000 private B2B SaaS companies found a median NRR of 101%. The [KeyBanc and Sapphire Ventures 2024 survey](https://sapphireventures.com/press/keybanc-capital-markets-and-sapphire-ventures-private-saas-company-survey-reveals-a-continued-focus-on-operational-efficiency-and-profitability/) reported about 101% too. NRR also tracks growth closely, as SaaS Capital's data shows.

| Net revenue retention | Median annual growth rate (SaaS Capital, 2025) |
|---|---|
| Below 90% | 15% |
| 90% to 100% | 16% |
| 100% to 110% | 21% |
| 110% to 120% | 30% |
| 120% to 130% | 38% |
| Above 130% | 50% |

Price point matters. In [ChartMogul's 2023 SaaS Retention Report](https://chartmogul.com/saas-retention-report/), built on more than 2,100 companies, only 2.7% of businesses with an average revenue per account under $10 a month had NRR above 100%, against 41.1% of those above $500 a month.

## What is gross revenue retention?

Gross revenue retention (GRR) is NRR without expansion. It shows how much existing revenue survives cancellations and downgrades, and it can never exceed 100%.

The formula is (starting ARR − contraction − churn) / starting ARR. With the same cohort, ($480,000 − $12,000 − $43,200) / $480,000 gives 88.5%, a little below the benchmark.

SaaS Capital measured a median GRR of 91% in 2025, rising to 95% for companies with annual contract values above $250,000. KeyBanc and Sapphire Ventures reported about 90% in 2024. Bessemer's analysis puts gross retention at 85% to 90% across revenue stages, and notes that SMB-focused companies can run lower.

## How do you calculate customer lifetime value?

Customer lifetime value (LTV) estimates the gross profit a customer brings over its whole relationship with you. The usual shortcut is ARPA × gross margin / churn rate, all on the same time unit.

For the example company, $250 of monthly revenue per account × 80% gross margin / 3% monthly logo churn gives an LTV of about $6,667. Using gross margin instead of revenue matters, because hosting, support and payment fees come out of every dollar.

The shortcut overstates LTV for young companies, since a churn rate measured over a few months is unstable and 1 / churn assumes the customer stays for years. A simple safeguard is to cap the assumed lifetime, for example at five years, instead of trusting 1 / churn.

## How do you calculate CAC?

Customer acquisition cost (CAC) is the total sales and marketing spend in a period divided by the number of new customers won in that period. Include salaries, commissions, advertising, events, agencies and sales tools, on top of ad spend.

The example company spent $60,000 on sales and marketing in the month and won 20 customers, a CAC of $3,000. When sales cycles are long, compare spend with customers won one or two months later, otherwise CAC swings with every hiring wave.

Split CAC by channel when you can. A paid search CAC, an outbound CAC and an inbound CAC often differ widely, and the blended figure hides which channel to fund.

## What is a good LTV to CAC ratio?

A good LTV to CAC ratio is above 3, meaning a customer returns at least three times its acquisition cost in gross profit. In [SaaS Metrics 2.0](https://www.forentrepreneurs.com/saas-metrics-2/), David Skok writes that the best SaaS businesses have a ratio higher than 3, sometimes as high as 7 or 8.

The example company sits at $6,667 / $3,000, or 2.2. That is below the target, and the levers are clear. Lower churn raises LTV, higher prices or expansion raise ARPA, and better conversion lowers CAC.

## How long should CAC payback take?

CAC payback is the number of months a new customer takes to repay its acquisition cost from gross profit. The formula is CAC / (new customer MRR × gross margin).

For the example, $3,000 / ($250 × 80%) gives 15 months. [Bessemer's guidance](https://www.bvp.com/atlas/scaling-to-100-million) is to target under 12 months for SMB customers, under 18 for mid-market and under 24 for enterprise. Skok adds that many of the best SaaS businesses recover CAC in 5 to 7 months, and that profitability is weak when payback goes beyond 12.

Payback often matters more than LTV to CAC in early stages, because it uses fewer assumptions. It answers a cash question, how long your money stays out before a customer pays it back.

## What is the Rule of 40?

The Rule of 40 says a software company's revenue growth rate plus its profit margin should be at least 40%. It lets investors compare a fast-growing, loss-making company with a slower, profitable one on one scale.

[BCG's 2025 benchmark](https://www.bcg.com/publications/2025/rule-of-40-lessons-from-top-performers-software) of 107 software companies backed by growth equity funds uses revenue growth plus EBITDA margin. It found that 26% of companies above $80 million in revenue beat the rule, 22% between $30 million and $80 million, and 9% below $30 million.

Our example company grew ARR from about $455,000 to $660,000 in a year, roughly 45%, with an EBITDA margin of minus 15%. Its score is 30. Given BCG's numbers, that puts it with most companies of its size, and growth alone will not carry the score once it slows.

## What is the burn multiple?

The burn multiple measures how much cash a company burns to add one dollar of net new ARR. David Sacks introduced it in [April 2020](https://sacks.substack.com/p/the-burn-multiple-51a7e43cb200) with the formula net burn / net new ARR.

The example company adds $5,000 of net new MRR a month, or $180,000 of net new ARR per quarter. If it burns $480,000 in the quarter, its burn multiple is 2.7. Sacks describes 2x as reasonable for an early-stage startup, sees 3x or more as a sign of product-market fit or other problems, and calls 5x terrible.

## Which SaaS metrics matter at each stage?

Track a few metrics well rather than all of them badly, and add the efficiency metrics once you have enough customers for them to mean something.

| Stage | Metrics to watch | Why |
|---|---|---|
| First 20 customers | MRR, logo churn, activation | Churn on small numbers shows product fit before any ratio does |
| Seed, up to about $1M ARR | MRR movements, revenue churn, CAC by channel, payback | You need to know which channel to fund |
| Series A, $1M to $5M ARR | NRR, GRR, payback, burn multiple | Investors judge expansion and efficiency |
| Growth stage | Rule of 40, NRR by segment, burn multiple | Growth and profitability are judged together |

## How do you track CAC by channel, including AI assistants?

Track CAC by channel by tagging every new customer with its source in the CRM, then dividing each channel's spend by the customers it brought. The hard part is attribution, since buyers often touch several channels before they book a demo.

AI assistants are now one of those channels. Google Analytics added an [AI Assistant channel on 13 May 2026](https://support.google.com/analytics/answer/9164320) for visits from chatbots such as ChatGPT, Gemini and Claude, which you can carry into your CRM as a lead source. Add the option to your "how did you hear about us" field as well, since many buyers read an AI answer and then type your URL directly.

Spend on that channel shows up as content, review management and tooling rather than ads. Our comparison of the [best GEO tools for SaaS](/en/best-geo-tools-for-saas) covers the tools that track it, and the [best CRM for startups](/en/best-crm-for-startups) guide explains the lead source setup.

## Frequently asked questions

### What is a good churn rate for B2B SaaS?

It depends on who you sell to. Data from ProfitWell, published by Lenny Rachitsky in 2022, puts good monthly churn at 2.5% to 5% for SMB and mid-market B2B SaaS, and 1% to 2% for enterprise. ChartMogul found a median monthly customer churn of 6.1% for accounts paying under $25 a month and 2.2% for accounts above $500.

### What is the difference between MRR and ARR?

MRR is the recurring revenue you can expect every month, and ARR is the same figure on a yearly basis, usually MRR times 12. Companies selling monthly plans to small customers tend to report MRR, while companies with annual contracts report ARR. Neither should include one-off setup fees or services.

### What is a good net revenue retention rate?

Above 100% means expansion from existing customers outweighs churn and downgrades. SaaS Capital measured a median of 101% across private B2B SaaS companies in 2025, with a top quartile around 106% to 115% depending on contract size. Companies with NRR above 130% grew at a median 50% a year in the same survey.

### What is a good LTV to CAC ratio?

The common target is above 3, meaning a customer brings in three times what it cost to acquire, measured on gross margin. David Skok writes that the best SaaS businesses exceed 3 and sometimes reach 7 or 8. A very high ratio can also mean you are underinvesting in growth.

### How do you calculate CAC payback?

Divide the CAC by the monthly gross profit a new customer brings, which is the new customer's MRR times your gross margin. A $3,000 CAC on a $250 a month customer with an 80% margin pays back in 15 months. Bessemer's targets are under 12 months for SMB, 18 for mid-market and 24 for enterprise.

### What is the Rule of 40 in SaaS?

It says a software company's revenue growth rate plus its profit margin should reach at least 40%. BCG uses EBITDA margin, while others use free cash flow margin. A company growing 45% with a minus 15% margin scores 30, below the line.

## Sources

- [SaaS Capital, 2025 B2B SaaS Retention Benchmarks (research brief)](https://www.saas-capital.com/wp-content/uploads/2025/09/RB32WS1-2025-B2B-SaaS-Retention-Benchmarks.pdf)
- [SaaS Capital, SaaS retention benchmarks for private B2B companies (September 2025)](https://www.saas-capital.com/research/saas-retention-benchmarks-for-private-b2b-companies/)
- [ChartMogul, SaaS Retention Report (November 2023)](https://chartmogul.com/saas-retention-report/)
- [ChartMogul, what is a good customer churn rate (February 2022)](https://chartmogul.com/blog/good-customer-churn-rate/)
- [Lenny's Newsletter, what is good monthly churn (February 2022, ProfitWell data)](https://www.lennysnewsletter.com/p/monthly-churn-benchmarks)
- [Sapphire Ventures, KeyBanc Capital Markets and Sapphire Ventures private SaaS company survey (October 2024)](https://sapphireventures.com/press/keybanc-capital-markets-and-sapphire-ventures-private-saas-company-survey-reveals-a-continued-focus-on-operational-efficiency-and-profitability/)
- [KeyBanc Capital Markets and Sapphire Ventures, 2025 private SaaS company survey release (November 2025)](https://www.stocktitan.net/news/KEY/private-saas-company-survey-reveals-ai-driven-transformation-and-hlzp1ug1t8z8.html)
- [Bessemer Venture Partners, Scaling to $100 Million (September 2021)](https://www.bvp.com/atlas/scaling-to-100-million)
- [David Skok, SaaS Metrics 2.0](https://www.forentrepreneurs.com/saas-metrics-2/)
- [BCG, Rule of 40, lessons from top performers in software (May 2025)](https://www.bcg.com/publications/2025/rule-of-40-lessons-from-top-performers-software)
- [David Sacks, The Burn Multiple (April 2020)](https://sacks.substack.com/p/the-burn-multiple-51a7e43cb200)
- [Google Analytics Help, what's new (AI Assistant channel, May 2026)](https://support.google.com/analytics/answer/9164320)