What are SaaS Metrics?

SaaS (Software as a Service) metrics are KPIs (Key Performance Indicators) that track the health and performance of your software business. To put benchmarks into context: High Alpha’s 2025 median Rule of 40 score for companies above $50M ARR was 30%.

 Use data based on monitoring past trends to inform your strategy.

You can track these SaaS metrics for your business:

• MRR (Monthly Recurring Revenue): measures the revenue your SaaS company receives every month on a recurring basis.
• ARR (Annual Recurring Revenue): this is 12 times the MRR and the yearly view of recurring revenue.
• Churn Rate: the percentage of customers who cancel their subscription in a particular time period.
• Net Revenue Retention (NRR): tNhe net change in recurring revenue from your current customer base, including upsells and churn.
• Customer Acquisition Cost (CAC): the total cost of acquiring a new customer, including marketing, sales, and onboarding.
• Customer Lifetime Value (LTV): the total amount of revenue a customer represents during the course of their relationship with your business.
• Net Promoter Score (NPS): measures how satisfied and loyal a customer is with your business.

The benefits of employing SaaS metrics are:

• Shows how well you’re doing: meeting objectives requires implementing a system to progress with metrics.
• Inform your strategy: make data-driven decisions instead of intuition to determine the direction of your business.
• Take action in good time: prevent churn in the early stages before your business gets in trouble.

Work out your MRR by multiplying the number of paying users you have by their average revenue (ARPU). Follow this formula:

MRR = Total Paying Customers × Average Revenue Per User (ARPU)

SaaS companies track key metrics to forecast and reduce churn in three ways:

• Understand churn: Collect metrics to spot patterns behind churn, such as poor onboarding.
• Monitor engagement: Keep track of ongoing signs of engagement to identify the health of your customers.
• Act on your metrics by reaching out: Salvage at-risk customers with surveys, personalized calls, or rewards.

Avoid these three critical mistakes when analyzing your SaaS metrics:

• Irrelevant metrics: Evaluating metrics that are not relevant to your objectives.
• Failure to contextualize: Metrics don’t mean anything unless taken in a broader picture.
• Losing momentum: Focusing on data collection without acting on the information gathered.

In the SaaS landscape, the Rule of 40 measures sustainable growth by requiring a company’s revenue growth rate plus its profit margin to hit at least 40%. Balancing these two levers is notoriously difficult as organizations scale. According to the 2025 High Alpha benchmarks, even late-stage companies with more than $50M ARR missed this target, posting a median score of 30%.