5 SaaS Metrics Every Founder Must Track

Why SaaS Metrics Matter

SaaS businesses are valued differently from traditional businesses. Investors and acquirers do not just look at revenue — they look at the quality of that revenue, how efficiently you acquire customers, and how long they stay.

If you cannot explain these five metrics clearly and confidently, it will cost you in funding rounds, exit valuations, and day-to-day decisions.

1. MRR — Monthly Recurring Revenue

Formula: Number of paying customers × average monthly subscription value

Why it matters: MRR is the heartbeat of your SaaS business and the first number investors focus on. Your MRR schedule should be accurate, reconciled to your accounting records, and broken down into new, expansion, and churned MRR.

UK benchmark: Healthy SaaS companies target 10–20% month-on-month MRR growth at early stage.

2. Churn Rate

Formula: Customers lost in period ÷ customers at start of period × 100

Why it matters: Even small differences in churn have a massive long-term impact. At 3% monthly churn, you retain 69% of customers after a year. At 5%, that drops to 54%.

UK benchmark: Target below 2% monthly churn (below 1% for enterprise-focused SaaS).

3. CAC — Customer Acquisition Cost

Formula: Total sales & marketing spend in period ÷ new customers acquired in the following period

Why it matters: CAC tells you how efficient your go-to-market motion is. Use the prior period’s spend against the current period’s new customers — there is always a lag between spending money and winning a customer.

4. LTV — Customer Lifetime Value

Formula: Average monthly revenue per customer ÷ monthly churn rate

Why it matters: LTV alone means little. The key ratio is LTV:CAC. A healthy SaaS business targets 3:1 or higher — meaning £3 in lifetime revenue for every £1 spent acquiring a customer.

UK benchmark: LTV:CAC of 3:1 or higher. Below 1:1 is a fundamental business model problem.

5. Runway

Formula: Current cash balance ÷ monthly net burn

Why it matters: Runway is the one metric that determines whether your company survives. You should always know it to the month, and your fractional CFO should be updating the forecast monthly — not just at board meetings.

Rule of thumb: Always maintain at least 12 months of runway. Start your next fundraise when you have 9–12 months left — never when you are desperate.

Frequently Asked Questions

How often should I review these metrics?

MRR and runway should be reviewed monthly. CAC and LTV are typically reviewed quarterly. During a fundraising process, review everything weekly.

What tools do SaaS founders use to track these?

Most early-stage SaaS companies use Excel or Google Sheets with data pulled from their CRM and accounting software (Xero, QuickBooks). A fractional CFO will typically build or audit your metrics dashboard in the first month of engagement.

Written by Constantin Botnari, Chartered Accountant & Fractional CFO for SaaS, AI and tech founders in London & UK. Connect on LinkedIn.