The 10 KPIs Every SaaS Business Must Track
Whether you're preparing for your next funding round or just trying to run your SaaS business more profitably, the truth is simple:
If you’re not tracking the right KPIs, you’re flying blind.
As a fractional CFO, I’ve worked with SaaS businesses across different growth stages — seed to Series C — and I’ve seen how tracking the right metrics can transform strategic decisions, team focus, and investor confidence.
Here’s a rundown of the top 10 KPIs every SaaS founder, operator, and CFO should be monitoring — and why they matter.
1. Monthly Recurring Revenue (MRR)
What it is: The predictable, subscription-based revenue you can count on every month.
Why it matters: MRR is the heartbeat of your SaaS model. It helps forecast cash flow, runway, and growth potential.
Variations to track:
New MRR
Expansion MRR (upsells)
Churned MRR
Net New MRR
2. Annual Recurring Revenue (ARR)
What it is: MRR × 12
Why it matters: A key metric for valuations, especially in investor decks. Think of ARR as your revenue engine on an annual scale.
3. Customer Acquisition Cost (CAC)
What it is: Total Sales & Marketing spend ÷ number of new customers acquired
Why it matters: CAC tells you how efficient your growth engine is. High CAC = cash burn without scalable return.
4. Customer Lifetime Value (LTV)
What it is: Average revenue per customer × average lifespan (in months or years)
Why it matters: Paired with CAC, this shows unit economics. A healthy SaaS business has an LTV:CAC ratio of 3:1 or better.
5. Gross Margin
What it is: (Revenue – COGS) ÷ Revenue
Why it matters: SaaS businesses should maintain gross margins of 70%–90%. Anything lower means cost leakage — often in cloud infrastructure or customer success.
6. Net Revenue Retention (NRR)
What it is: (Starting MRR + Expansion – Churn – Contraction) ÷ Starting MRR
Why it matters: This tells you whether your existing customers are growing with you. Best-in-class SaaS companies have NRR > 120%.
7. Churn Rate
What it is: % of customers or revenue lost each month
Why it matters: High churn kills growth. You must understand both logo churn (number of customers) and revenue churn (value lost).
8. Burn Multiple
What it is: Net cash burned ÷ Net new ARR
Why it matters: Especially in a tighter funding environment, investors want to know: how efficiently are you turning cash into recurring revenue? A burn multiple under 1.5 is strong.
9. Payback Period
What it is: How long it takes to recover CAC
Why it matters: Faster payback = stronger liquidity. SaaS companies aim for payback under 12 months.
10. Rule of 40
What it is: Growth rate + EBITDA margin
Why it matters: It balances growth with profitability. If you’re growing 60% but burning -30% margins, your Rule of 40 is 30 — still healthy. Below 40? It's a warning sign for investors.
Bonus: Metrics to Track Operational Health
Sales Pipeline Conversion: Are you closing fast enough?
Active Users vs. Subscribers: Engagement gap = churn risk
Product Usage KPIs: Feature adoption, logins, session length
Final Thought
Tracking KPIs is not just about vanity metrics for board decks. It’s about driving accountability and smart decision-making across your business.
📈 When I step in as a fractional CFO, one of my first actions is to build a SaaS metrics dashboard aligned with your board, growth stage, and funding goals. It’s your command center.
📞 Need Help With SaaS KPI Strategy?
Whether you're getting ready for a fundraise or tightening up your operating plan, I can help you build the right metrics engine to scale confidently.
Lets build your robust KPI for SaaS business. Schedule for free consultation or email me
