SaaS & Subscription Metrics
The core metrics that define subscription business health — MRR, churn, NRR, and LTV:CAC.
35 articles
What Is Monthly Recurring Revenue (MRR)?
MRR is the lifeblood metric for any subscription business. It tells you how much predictable revenue you generate every month — and how that number is changing.
What Is Churn Rate?
Churn rate measures how fast you are losing customers or revenue. It is one of the most important — and most often ignored — metrics for any subscription business.
What Is the LTV:CAC Ratio?
The LTV:CAC ratio compares how much a customer is worth over their lifetime to how much it cost to acquire them. It is the fundamental measure of whether your business model works.
What Is Annual Recurring Revenue (ARR)?
Annual Recurring Revenue normalises your subscription income to a 12-month view, making it easier to track growth, set targets, and compare periods.
What Is MRR Growth Rate?
MRR Growth Rate measures how fast your monthly recurring revenue is expanding, and is the single most watched momentum indicator for early-stage SaaS.
What Is Expansion MRR?
Expansion MRR is additional recurring revenue generated from existing customers through upsells, cross-sells, or seat additions — the most efficient growth lever in SaaS.
What Is Contraction MRR?
Contraction MRR is the recurring revenue lost when existing customers downgrade their plan or reduce seat count — a silent drain that erodes growth without triggering a churn alert.
What Is Customer Acquisition Cost (CAC) in SaaS?
CAC measures the total cost of acquiring one new paying customer, and is the foundation of every SaaS unit economics calculation.
What Is Daily Active Users (DAU)?
Daily Active Users measures how many unique users engage with your product on a given day — a leading indicator of habit formation and long-term retention.
What Is Monthly Active Users (MAU)?
Monthly Active Users is the standard measure of your product's engaged user base — the denominator for engagement ratios and a key input to SaaS health metrics.
What Is Feature Adoption Rate?
Feature Adoption Rate measures what percentage of your users are using a specific feature — essential for validating product investments and identifying expansion opportunities.
What Is a Product Qualified Lead (PQL)?
A Product Qualified Lead is a free trial or freemium user who has reached a usage milestone that predicts conversion to paid — the foundation of product-led growth sales motions.
What Is Time to Value (TTV)?
Time to Value measures how long it takes a new customer to experience their first meaningful outcome from your product — the single most important onboarding metric.
What Is a Customer Health Score in SaaS?
A Customer Health Score aggregates product usage, support, and engagement signals into a single number that predicts whether an account will renew, expand, or churn.
What Is Revenue Churn Rate?
Revenue Churn Rate measures the percentage of recurring revenue lost in a period from cancellations and downgrades — the financial complement to logo churn.
What Is Net Revenue Retention?
Net revenue retention measures how much recurring revenue you keep and expand from existing customers. Learn the formula, benchmarks, and why investors care.
What Is Gross Revenue Retention?
Gross revenue retention measures the percentage of recurring revenue retained from existing customers, excluding expansion. Learn the formula and benchmarks.
What Is Expansion Revenue?
Expansion revenue is additional recurring revenue generated from existing customers through upgrades, cross-sells, and usage growth. Learn how to grow it.
What Is Contraction Revenue?
Contraction revenue represents the recurring revenue lost when existing customers downgrade or reduce their usage. Learn how to measure and minimise it.
What Is Logo Churn?
Logo churn measures the percentage of customers (logos) who cancel within a given period. Learn how it differs from revenue churn and how to reduce it.
What Is Revenue Churn?
Revenue churn measures the recurring revenue lost from customer cancellations and downgrades. Learn the formula, benchmarks, and strategies to reduce it.
What Is ARR (Annual Recurring Revenue)?
ARR is the annualised value of a company's recurring subscription revenue. Learn how to calculate it, what it includes, and why it matters.
What Is a Cohort Retention Curve?
A cohort retention curve tracks how customer retention changes over time for groups of customers who started in the same period. Learn how to read and use them.
What Is the Quick Ratio (SaaS)?
The SaaS Quick Ratio measures growth efficiency by comparing revenue gains to revenue losses. Learn the formula and what a healthy ratio looks like.
What Is the Payback Period (SaaS)?
The SaaS payback period measures how many months it takes to recover the cost of acquiring a customer. Learn how to calculate and improve it.
MRR vs ARR: What's the Difference?
Understand the difference between Monthly Recurring Revenue and Annual Recurring Revenue, and when to use each metric for your SaaS business.
Gross Churn vs Net Churn: What's the Difference?
Learn how gross churn and net churn differ, why net churn accounts for expansion revenue, and which metric matters most for SaaS growth.
Logo Churn vs Revenue Churn: What's the Difference?
Discover the difference between logo churn and revenue churn, and why tracking both gives a complete picture of SaaS customer retention.
LTV vs CAC: What's the Difference?
Understand how Customer Lifetime Value and Customer Acquisition Cost work together to determine SaaS unit economics and profitability.
NRR vs GRR: What's the Difference?
Learn how Net Revenue Retention and Gross Revenue Retention differ, and why both are essential metrics for measuring SaaS growth efficiency.
Bookings vs Revenue: What's the Difference?
Understand the critical difference between bookings and revenue in SaaS, and why confusing them can lead to poor financial decisions.
Billings vs Revenue: What's the Difference?
Learn how billings and revenue differ in SaaS accounting, and why the distinction matters for cash flow management and financial reporting.
SaaS vs PaaS: What's the Difference?
Compare Software as a Service and Platform as a Service to understand their distinct models, use cases, and relevance to African tech ecosystems.
Horizontal vs Vertical SaaS: What's the Difference?
Compare horizontal and vertical SaaS models, their go-to-market strategies, and how each approach serves different market opportunities in Africa.
Self-Serve vs Sales-Led SaaS: What's the Difference?
Compare self-serve and sales-led SaaS go-to-market models, their economics, and which approach works best for different African market segments.