15 SaaS financial metrics you need to track

The software-as-a-service (SaaS) market is worth more than $141bn worldwide, with predictions suggesting steady growth over the next five years.

In the US alone, there are now 17,000 as-a-service companies offering a host of products and services to prospective customers, with more emerging every month as businesses look to capitalize on the power and performance of the cloud.

While market growth offers more choice for consumers and encourages the development of new software offerings, it also creates a challenge for companies: increased competition.

As providers look to stand out from the crowd, they need to offer the right mix of price, products, and performance—or risk getting left behind.

The key to sustained success? Metrics.

By identifying and measuring the right SaaS metrics, companies can assess their current financial health and take corrective action where necessary.

Not sure where to get started?

Here are 15 SaaS financial metrics you need to track.

15 foundational finance metrics

While every provider has a unique set of metrics that matter most for their market niche, every business can benefit from tracking these foundational finance metrics.

1. Monthly recurring revenue (MRR)

Because SaaS companies use a subscription-based model, MRR takes the top spot on our list.

When companies know how much they expect to make each month on average, they can use this data to inform immediate spending decisions such as hardware or network updates and leverage this information to develop long-term sales and retention strategies.

Calculating MRR requires two values: the total number of active accounts in a given month, and the average rate paid by account holders each month.

MMR = total number of accounts x average rate

For example, if a company has 1,000 accounts each paying $40 monthly, its MRR is $40,000.

It’s worth noting that this value can fluctuate over time as new accounts are added or contracts come to an end.

As a result, it’s worth regularly calculating MRR to ensure spending aligns with revenue.

2. Average revenue per account (ARPA)

Average revenue per account—also called average revenue per customer—measures how much revenue each customer generates each month.

This metric is useful for cost-setting.

If market comparisons reveal that subscription prices are below the average, businesses may be able to increase monthly costs without increasing customer churn.

If prices are higher than average, companies can conduct customer surveys to ensure that clients are getting value for their money.

To calculate ARPA, divide MMR by the total number of active customer accounts.

ARPA = MMR / total number of accounts

This means that if MMR is $20,000 across 2,000 active accounts, ARPA is $1,000.

3. Customer lifetime value (CLV)

Customer lifetime value represents the average revenue from customers over the lifetime of their account.

To calculate CLV, multiply the average customer revenue by contract average contract length.

CLV = Average customer revenue x average contract length

If the average customer revenue is $30 per month and the average contract length is 36 months, CLV is $1,080.

Along with customer acquisition cost (CAC, the next metric on our list), CLV plays a key role in evaluating business profitability.

4. Customer acquisition cost (CAC)

Customer acquisition cost (CAC) is the amount that it costs to convert a new customer.

To calculate this cost, businesses divide the total costs of sales and marketing over a given period by the total number of new customers acquired.

CAC = total sales and marketing costs / total number of new customers over a given period

For example, if a business spends $10,000 in sales and marketing to acquire 50 new customers, its average CAC is $200.

If, however, they spend the same amount to acquire just 10 new customers, CAC is $1,000.

Comparing CAC and CLV helps companies evaluate their profitability.

In the example from metric no.3, CLV was $1,080. If CAC is $200, businesses stand to make $880 on each customer over time.

If, however, CAC is $1,000, this lowers the total potential revenue to just $80.

5. CAC payback period

The CAC payback period is the amount of time it takes to recoup the costs of sales and marketing to bring in a new customer.

This metric is calculated by dividing CAC by MRR.

CAC payback period = CAC / MRR

This means that if CAC is $500 and MRR is $50, it will take 10 months to recoup CAC costs.

If CAC is higher or MRR is lower, the CAC payback period could be significantly longer.

Shorter payback periods mean more revenue, more quickly.

6. Customer conversion rate

The customer conversion rate represents the number of people who took a desired action—such as signing up for a demo or making a purchase—after visiting a company’s website or reading a sales email.

To calculate the customer conversion rate, divide the total number of conversions by the number of clicks or visits, multiplied by 100 to give a percentage.

Conversion rate = (total conversions / total clicks or visits) x 100

Consider a company that sees 20,000 site visitors over a month. Of those, 400 convert by purchasing an SaaS subscription.

In this case, the customer conversion rate is 2%.

7. Customer churn rate

Customer churn rate is a measure of how many customers cancel their subscriptions over a given period.

It is calculated by dividing the total number of customers leaving over a set period by the number of customers at the beginning of the period, multiplied by 100 to give a percentage.

Customer churn rate = (total number of cancellations / total number of customers) x 100

This means that if a company has 5,000 customers and 250 of them leave during a set period, the churn rate is 5%.

Higher churn rates mean lower revenues—even a 1% reduction in churn rate can help boost profitability.

8. Annual contract value (ACV)

ACV measures the average value of a contract over a set period, typically a year.

Calculate this metric by dividing the total value of the contract by the number of years of the contract.

ACV = contract value / years of contract

For example, if a contract is worth $1,000 in total over two years, the ACV is $500.

This value is useful for budget and strategy planning. If businesses know the average value of contracts per year, they can estimate their total value gained per year and determine how much they need to spend on sales and marketing, and how much they should budget for customer service and other operations.

9. Average selling price (ASP)

Average selling price provides a baseline for what customers are willing to pay for SaaS products.

Find this value by dividing total software revenue for a given period by the total number of customers using the software.

ASP = total software revenue / total number of customers

If a company earns $100,000 in software revenue over a month and has 2,000 customers, the ASP is $50.

Along with MRR and ARPA, this value can help companies find the ideal price point for their products.

10. Activation rate

Activation rate measures the number of users who convert from trial periods to paid subscriptions.

This value is calculated by dividing the number of users who chose to activate their software by the number of users who signed up for a trial, multiplied by 100 to give a percentage.

Activation rate = (users who chose to activate / number of trial users) x 100

This means that if 10 users activated their software and 500 signed up for the trial over a given period, the activation rate is 2%.

11. Net promoter score (NPS)

NPS is a measure of how many customers would recommend—or ‘promote’—a company’s products or services to other customers.

To calculate this value, companies send surveys to customers asking them how likely they would be to recommend the company on a scale of 1-10:

• Customers that give a value between 1 and 6 are considered detractors
• Those who give a 7 or 8 are known as passives
• Customers who give a score of 9 or 10 are promoters.

To find NPS, subtract the percentage of detractors from the percentage of promoters. Passives are not counted.

NPS = percentage of promoters – percentage of detractors

If an NPS survey reveals that 80% of respondents are promoters, 10% are passives and 10% are detractors, the company’s NPS score is 70. The higher this score, the better.

12. Net retention rate (NRR)

NRR helps companies determine if their business is growing, shrinking or static.

To calculate this metric, add MRR to any additional revenue from new customers, then subject any revenue lost from customer churn, divide by MRR, and multiply by 100 for a percentage.

NRR = {[(MRR + additional revenue) – churn revenue lost] / MRR} x 100

This means that if MRR is $20,000 and a company added $4,000 in new revenue but lost $6,000 due to churn, the NRR Is 90%.

Values over 100% mean a company is growing, while values under 100% indicate loss.

13. Qualified marketing traffic

Qualified marketing traffic represents the number of returning visitors to a company website who are not already customers.

This behavior indicates they are likely to become customers and therefore represent potential revenue.

To calculate this value, companies need to separate existing customer traffic from prospective customer traffic.

This can be accomplished using event tracking or opt-in analytics that helps identify users by their device ID or behavior.

To calculate this metric, companies subtract the number of existing customer visits from the total number of site visitors.

Qualified marketing traffic = total site visitors – existing customers

For example, if analytics identifies 5,000 total site visitors and 4,500 existing customers, this means 500 visits came from qualified marketing traffic.

14. Traffic-to-lead rate

Traffic-to-lead rate measures the number of visitors who take a specific action that turns them into leads, such as signing up for a newsletter or demo, or reaching out to the company for more information.

Calculate this metric by dividing the number of leads generated over a set timeframe from the total number of visits, then multiply by 100 to give a percentage.

Traffic to lead rate = (total number of visits / number of leads generated) x 100

If a company sees 10,000 visitors and 100 turn into leads, their traffic-to-lead rate is 1%.

15. Utilization rate (seat and login)

The utilization rate measures how many customers are using SaaS products regularly.

It can be calculated in several ways—two of the most common are by seat and by login.

Seats represent the number of users from a given company that can use the software simultaneously under the terms of their contract.

Logins represent the total number of users accessing the software over a given period. To calculate the utilization rate, divide the number of seats or logins used over a set period by the total number of seats or logins and then multiply by 100 for a percentage.

Utilization rate = (number of seats or logins used / total number of seats or logins) x 100

This means that if 50 logins are used out of 100 over a set period of time, the utilization rate is 50%.

Higher rates typically indicate greater customer satisfaction and a greater likelihood of contract continuation or upgrades.

Final thoughts on SaaS financial metrics

Success isn’t simply made—it’s measured.

By tracking key financial metrics, SaaS companies are better equipped to understand where products are performing, where issues are emerging, and where action is essential to improve conversion rates, increase monthly revenue, and keep customers coming back.