SaaS Metrics Glossary: Every Term Founders Actually Use

You hit an unfamiliar acronym in a blog post, a pitch deck, or your own analytics dashboard. You need the definition — not a 2,000-word essay. This is that page. Every SaaS metric founders actually encounter, defined in plain language with a formula where it matters.

How to Use This Glossary

Terms are grouped by function: revenue, growth, unit economics, and financial health. Each entry has a one-paragraph definition, a formula when applicable, and a link to the full article if you want the deep dive. If you want a curated set of the metrics that matter most for bootstrapped founders, start with the SaaS metrics for founders guide instead. This page is the reference shelf behind it.

For quick acronym lookups, jump to the SaaS Acronym Quick Reference table at the bottom. For the short-form cheat sheet, see the SaaS acronyms cheat sheet.

Revenue Metrics

MRR (Monthly Recurring Revenue)

MRR is the predictable monthly revenue from active subscriptions, normalized to a monthly cadence.

If a customer pays €588/year, their MRR contribution is €49/month. MRR only counts recurring charges — one-time fees, usage overages billed after the fact, and refunds are excluded. It is the single most-watched number in subscription businesses because it smooths out timing noise.

MRR = Sum of (monthly price × active subscribers per plan)

Full guide: What Is MRR — the clean version

ARR (Annual Recurring Revenue)

ARR is your annualized recurring revenue — MRR multiplied by 12.

ARR is the standard reporting metric for SaaS companies once they pass roughly €1M in revenue. Below that threshold, MRR is more useful because monthly changes are large enough in percentage terms that annual projections mislead. ARR assumes your current MRR holds for 12 months, which it won’t — but it gives a consistent yardstick for year-over-year comparison.

ARR = MRR × 12

Full guide: What does ARR mean | ARR formula | How to calculate ARR

NRR (Net Revenue Retention)

NRR measures how much revenue you retain from existing customers over a period, including expansions and contractions.

An NRR above 100% means your existing customers are spending more over time — expansions outweigh churn and downgrades. Median NRR for bootstrapped SaaS sits around 90-100% (OpenView, 2024). Enterprise products with seat-based pricing often exceed 120%. For a solo founder, NRR above 95% means your product is sticky enough to compound.

NRR = (Starting MRR + Expansion - Contraction - Churned MRR) / Starting MRR × 100

Full guide: NRR for bootstrappers | GRR vs NRR

GRR (Gross Revenue Retention)

GRR measures how much revenue you retain from existing customers excluding any expansion revenue.

GRR can never exceed 100%. It tells you how much of your existing base you are losing — independent of upsells. A GRR below 85% signals a retention problem that expansion revenue is just masking. Think of GRR as the floor and NRR as the ceiling of your retention story.

GRR = (Starting MRR - Contraction - Churned MRR) / Starting MRR × 100

Full guide: GRR vs NRR

ARPU (Average Revenue Per User)

ARPU is the average monthly revenue generated per active customer.

ARPU tells you whether your pricing is pulling its weight. If ARPU is flat while your customer count grows, you are acquiring cheaper plans. If ARPU rises, your expansion or pricing strategy is working. For bootstrapped SaaS, an ARPU between €30 and €150/month is common (SaaS Capital, 2024).

ARPU = MRR / Total active customers

Full guide: ARPU as a monetization signal

ACV (Annual Contract Value)

ACV is the average annualized revenue per contract, typically used for products with annual or multi-year deals.

ACV and ARR are related but different. ARR is total annualized revenue across all customers. ACV is the average per-contract figure. If you sell monthly plans, ACV is less relevant — ARPU serves the same purpose on a monthly basis.

ACV = Total contract value / Contract length in years

Full guide: What is ACV

Run Rate

Run Rate is a forward projection of revenue based on a recent period, assuming no change.

If you made €8,000 in March, your monthly run rate is €8,000 and your annual run rate is €96,000. Run rate is useful for quick mental math but dangerous when cited as actual revenue. It ignores seasonality, churn, and the fact that next month is never identical to this month.

Annual Run Rate = Current month revenue × 12

Full guide: Run rate — the 60-second reality check

Deferred Revenue

Deferred revenue is cash you have collected but not yet earned — typically from annual or multi-month prepayments.

If a customer pays €588 upfront for a yearly plan, you recognize €49/month as earned revenue. The remaining balance is deferred. This matters for accounting accuracy, tax timing, and understanding your real cash position versus your recognized revenue.

Full guide: Deferred revenue in SaaS

Gross Revenue vs Net Revenue

Gross revenue is total revenue before deductions. Net revenue is what remains after refunds, discounts, and chargebacks.

Net revenue is the honest number. If your Stripe dashboard shows €12,000 in charges but you issued €800 in refunds and €200 in dispute losses, your net revenue is €11,000. Always report net.

Full guide: Gross vs net revenue

Growth Metrics

Churn Rate

Churn rate is the percentage of customers (or revenue) lost during a given period.

Churn is the most misunderstood SaaS metric. Logo churn counts lost customers regardless of plan size. Revenue churn weights by dollars lost. A 5% monthly logo churn means you replace half your customer base every year. For bootstrapped SaaS, monthly logo churn below 3% is decent; below 1.5% is strong (Bessemer, 2024).

Monthly Churn Rate = Customers lost during month / Customers at start of month × 100

Full guide: What is churn rate | How to calculate churn rate | Revenue churn vs customer churn | Complete churn guide

Retention Rate

Retention rate is the inverse of churn — the percentage of customers (or revenue) you keep over a period.

If your monthly churn is 3%, your monthly retention rate is 97%. Retention is the compounding engine behind sustainable SaaS growth. Small improvements in retention create outsized long-term impact because they compound month over month.

Retention Rate = 100% - Churn Rate

Full guide: How to calculate retention rate

Cohort Analysis

Cohort analysis groups customers by their signup month and tracks their behavior over time.

Cohorts reveal whether your product is improving. If January signups retain at 70% after 6 months but April signups retain at 80%, something you shipped between January and April is working. Without cohorts, you are looking at blended averages that hide the trend.

Full guide: Cohort analysis for SaaS founders

Revenue Growth Rate

Revenue growth rate measures the percentage increase in revenue between two periods.

A simple but frequently misquoted metric. Month-over-month growth of 10% sounds impressive until you realize it was driven by a single annual contract. Always look at the composition — new MRR, expansion MRR, and churned MRR — not just the top-line change.

MoM Growth Rate = (MRR this month - MRR last month) / MRR last month × 100

Full guide: How to calculate revenue growth rate

Activation Rate

Activation rate is the percentage of new signups who complete a key action that predicts long-term retention.

The key action depends on your product. For an analytics tool, it might be connecting a data source. For a project management app, it might be creating the first project. Activation is the leading indicator — it tells you whether your onboarding converts signups into real users before you have enough time data to measure retention.

MQL vs SQL

MQL (Marketing Qualified Lead) is a prospect who meets marketing criteria. SQL (Sales Qualified Lead) is a prospect who meets sales-readiness criteria.

For most bootstrapped SaaS with self-serve signup, MQL/SQL is less relevant than activation and conversion rate. But if you run any outbound or content-driven funnel, the MQL-to-SQL conversion rate tells you whether marketing and sales agree on what a real prospect looks like.

Full guide: MQL vs SQL in B2B SaaS

Unit Economics

CAC (Customer Acquisition Cost)

CAC is the total cost to acquire one new customer, including marketing and sales spend.

CAC only makes sense when you include all acquisition costs — ad spend, content production, tools, and your time if you are doing sales manually. A common mistake is counting only ad spend and claiming a €20 CAC when the real fully-loaded number is €150. Average CAC for SMB SaaS sits between €100 and €500 (OpenView, 2024).

CAC = Total sales & marketing spend / New customers acquired

Full guide: Customer acquisition cost formula | Average CAC benchmarks

LTV (Lifetime Value)

LTV (also CLV or CLTV) is the total revenue you expect to earn from a customer over their entire relationship.

LTV is a projection, not a fact. It depends on your churn rate staying constant, which it rarely does. The quick formula works for mental math; the more accurate version discounts future revenue. The key ratio: LTV should be at least 3x your CAC. Below that, your unit economics do not sustain growth.

LTV = ARPU / Monthly Churn Rate

Full guide: Calculating LTV for SaaS

CAC Payback Period

CAC payback period is the number of months it takes for a customer’s revenue to cover their acquisition cost.

If your CAC is €300 and your ARPU is €50/month, your payback period is 6 months. For bootstrapped founders, payback period matters more than LTV/CAC ratio because it directly maps to cash flow. A payback period under 12 months is healthy; under 6 months means you can reinvest aggressively.

CAC Payback Period = CAC / (ARPU × Gross Margin %)

Full guide: CAC payback period for SaaS founders

LTV/CAC Ratio

LTV/CAC compares customer lifetime value to acquisition cost. It measures the return on your acquisition spending.

The common benchmark is 3:1 — every euro spent on acquisition should generate €3 in lifetime revenue. Below 1:1, you are literally paying customers to use your product. Above 5:1, you are probably under-investing in growth. This ratio only works when both LTV and CAC are calculated honestly.

LTV/CAC Ratio = LTV / CAC

Financial Metrics

Burn Rate

Burn rate is how fast you spend cash each month, net of revenue.

Gross burn is total monthly spending. Net burn subtracts revenue. If you spend €8,000/month and earn €3,000/month, your net burn is €5,000. For bootstrapped founders, net burn is the number that matters — it tells you how fast your runway is shrinking.

Net Burn Rate = Monthly expenses - Monthly revenue

Full guide: Burn rate — how long is your runway | How to calculate burn rate

Runway

Runway is how many months you can operate at your current burn rate before running out of cash.

If you have €30,000 in the bank and burn €5,000/month net, you have 6 months of runway. Runway below 6 months is a red zone for any founder without reliable revenue growth to close the gap. Re-check it monthly — it changes with every revenue fluctuation.

Runway (months) = Cash balance / Net Burn Rate

Full guide: SaaS financial model — predicting runway

Gross Margin

Gross margin is revenue minus cost of goods sold (COGS), expressed as a percentage.

For SaaS, COGS includes hosting, infrastructure, payment processing fees, and customer support costs directly tied to service delivery. Healthy SaaS gross margins run between 70% and 85% (KeyBanc, 2024). Below 60%, your cost structure is eating your ability to invest in growth.

Gross Margin = (Revenue - COGS) / Revenue × 100

Full guide: SaaS gross margin

Net Cash Flow

Net cash flow is the total cash coming in minus the total cash going out during a period.

Positive net cash flow means you are generating more cash than you spend. Unlike profit, cash flow accounts for timing — a customer paying annually puts cash in your account today, even though you recognize revenue over 12 months. Cash flow keeps you alive; profit is an accounting construct.

Net Cash Flow = Cash inflows - Cash outflows

Full guide: How to calculate net cash flow

EBIT vs EBITDA

EBIT is earnings before interest and taxes. EBITDA adds back depreciation and amortization.

For most bootstrapped SaaS companies with minimal fixed assets, EBIT and EBITDA are nearly identical. EBITDA became the standard because it strips out non-cash accounting charges, giving a cleaner view of operational profitability. Neither metric accounts for capital expenditures, which for SaaS means significant engineering investment.

Full guide: EBIT vs EBITDA in SaaS

Fixed vs Variable Costs

Fixed costs stay the same regardless of revenue (rent, salaries). Variable costs scale with usage or revenue (hosting, payment processing fees).

SaaS businesses have high fixed costs and relatively low variable costs — that is what makes the gross margin attractive. Understanding the split matters when you model scenarios: fixed costs are your baseline burn, variable costs scale with success.

Full guide: Fixed vs variable costs in SaaS

SaaS Acronym Quick Reference

Acronym	Full Name	Category
MRR	Monthly Recurring Revenue	Revenue
ARR	Annual Recurring Revenue	Revenue
NRR	Net Revenue Retention	Revenue
GRR	Gross Revenue Retention	Revenue
ARPU	Average Revenue Per User	Revenue
ACV	Annual Contract Value	Revenue
CAC	Customer Acquisition Cost	Unit Economics
LTV	Lifetime Value (also CLV, CLTV)	Unit Economics
MQL	Marketing Qualified Lead	Growth
SQL	Sales Qualified Lead	Growth
EBIT	Earnings Before Interest & Taxes	Financial
EBITDA	Earnings Before Interest, Taxes, Depreciation & Amortization	Financial
COGS	Cost of Goods Sold	Financial
PLG	Product-Led Growth	Strategy
RevOps	Revenue Operations	Operations

For expanded definitions of every acronym with usage notes, see the full SaaS acronyms cheat sheet.

Metrics That Connect: What to Track Together

Individual metrics lie when read in isolation. Here is how they pair:

MRR + Churn Rate — MRR tells you the size of the bucket; churn tells you the size of the hole. Track both or you are guessing.
CAC + LTV — CAC without LTV is just a cost number. LTV without CAC is wishful thinking. The ratio is the signal.
NRR + Cohort Analysis — NRR gives you the blended average; cohorts tell you if the trend is improving or degrading.
Burn Rate + Runway — Burn rate without runway is an expense report. Together, they are a countdown.
ARPU + Gross Margin — ARPU tells you what you charge; gross margin tells you what you keep. A high ARPU with a low margin means your infrastructure costs are out of control.

For the curated dashboard view of which metrics to prioritize at your stage, the SaaS dashboard in a day guide walks through the eight that matter most.

FAQ

What is the most important SaaS metric?

MRR is the most-tracked metric because it normalizes all recurring revenue to a single monthly figure. But no single metric tells the full story — MRR combined with churn rate and CAC payback period gives you the minimum viable picture of your business health.

How many SaaS metrics should a founder track?

Start with five to eight. MRR, churn rate, ARPU, CAC, and runway cover the essentials. Add NRR and cohort analysis once you have six-plus months of data. Tracking 30 metrics from day one creates noise, not clarity.

What is the difference between ARR and revenue?

ARR is specifically annualized recurring subscription revenue. Total revenue can include one-time fees, professional services, and non-recurring charges. ARR is a subset — and for SaaS valuation, it is the subset that matters.

What is a good NRR for a SaaS company?

For bootstrapped SaaS, NRR above 95% is solid and above 105% is strong. Enterprise SaaS companies with seat-based expansion often report NRR between 110% and 130% (OpenView, 2024). Below 85% signals a product-market fit or pricing problem.

What is the difference between logo churn and revenue churn?

Logo churn counts the number of customers lost. Revenue churn weights by the MRR those customers represented. You can have low logo churn but high revenue churn if your biggest customers leave — which is actually the worse scenario.

How do I calculate my SaaS runway?

Divide your current cash balance by your monthly net burn rate. If you have €50,000 in the bank and spend €4,000/month more than you earn, your runway is 12.5 months. Recalculate monthly because both revenue and expenses shift.

Every metric in this glossary, calculated automatically from your Stripe data. No spreadsheets, no formulas — free up to €10k MRR →

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