Formulas, not feel-good
SaaS metric formulas and how to calculate them.
Canonical formulas for the ten core SaaS metrics — MRR, ARR, CAC, LTV, LTV:CAC, churn rate, ARPU, CAC payback period, burn multiple, NRR. Each page covers the formula, a worked example, what the metric tells you, what it does NOT tell you, and the common miscalculations indie SaaS founders make.
Distinct from /glossary (Brunson-method terms — Hook, Story, Offer) and /benchmarks (directional ranges — “what is a good X”). Saas-metric is the “what IS X and how do I calculate it” surface.
Revenue
- MRR — MRR is the predictable monthly revenue a SaaS earns from active recurring subscriptions, normalized to a monthly basis.
- ARR — ARR is the annualized value of recurring revenue, calculated as MRR × 12 or as the sum of annual subscription values.
- ARPU — ARPU is the average monthly revenue from a single user, calculated as MRR divided by paying customer count.
Acquisition
Retention
Unit economics
- LTV — LTV is the total expected revenue (or gross profit) from a single customer over the lifetime of their subscription with you.
- LTV:CAC — LTV:CAC ratio is the multiple of customer lifetime value over customer acquisition cost — the single highest-signal unit-economics metric.
- Payback — CAC payback period is the number of months it takes for a customer's gross profit to repay their acquisition cost.
Operational
Pair definitions with directional ranges
Each metric page that has a matching benchmark cross-links to its directional range. Use this hub for definitions and formulas; use the benchmarks hub for the “is this number good?” question.