# SaaS Metrics Glossary

> ARR, NRR, CAC payback, and 21 more SaaS metrics defined with the exact formula investors and boards expect, so your reporting doesn't get corrected in the board meeting.

Free cheat sheet for sales teams. Topic: [Metrics, Analytics & RevOps](https://www.peerlab.ai/library/topic/metrics-analytics-revops/). Published by PeerLab in the [Sales Enablement Resource Library](https://www.peerlab.ai/library/). Source: https://www.peerlab.ai/library/saas-metrics-glossary/

## How to use it

Keep it open next to your board deck or investor update and swap in the exact formula for whichever metric is being challenged: most attribution disputes in a board meeting come down to a formula mismatch, not a data problem.

## What's inside

- Revenue metrics: MRR, ARR, ACV, TCV
- Retention metrics: NRR, GRR, logo churn, logo retention, revenue churn
- Acquisition & efficiency metrics: CAC, CAC payback, LTV, LTV:CAC, Magic Number, Rule of 40, Burn Multiple
- Sales & pipeline metrics: gross margin, SaaS Quick Ratio, pipeline coverage, win rate, sales cycle length, ASP, expansion revenue rate, ARR per employee
- Every definition given as an exact formula, not a prose approximation

24 metrics, defined the exact way investors and boards expect to hear them: so your reporting doesn't get "well, that's not quite how we calculate it" pushback in a board meeting.

## Revenue Metrics

**1. MRR, Monthly Recurring Revenue**
Sum of all recurring subscription revenue normalized to a monthly amount. Excludes one-time fees, professional services, and usage overages unless contractually committed.

**2. ARR, Annual Recurring Revenue**
`ARR = MRR × 12`
The headline number boards track quarter over quarter.

**3. ACV, Annual Contract Value**
`ACV = Total Contract Value ÷ Contract Term (in years)`
Used to compare deal sizes across contracts of different lengths on an apples-to-apples basis.

**4. TCV: Total Contract Value**
`TCV = ACV × Contract length (years)`
The full value of the contract, used for bookings reporting.

## Retention & Churn Metrics

**5. NRR, Net Revenue Retention**
`NRR = (Starting ARR + Expansion − Contraction − Churn) ÷ Starting ARR × 100`
Excludes new-logo revenue. The single most-watched retention metric by investors, 100%+ means your existing base is growing revenue even with zero new sales.

**6. GRR: Gross Revenue Retention**
`GRR = (Starting ARR − Contraction − Churn) ÷ Starting ARR × 100`
Same as NRR but excludes expansion, and is capped at 100%, isolates how much revenue you'd have with no upsell at all. Boards use GRR and NRR together: GRR shows retention health, NRR shows retention-plus-growth.

**7. Logo Churn Rate**
`Logo Churn Rate = Customers Lost in Period ÷ Customers at Start of Period`

**8. Logo Retention Rate**
`Logo Retention Rate = 1 − Logo Churn Rate`

**9. Revenue Churn Rate**
`Revenue Churn Rate = Revenue Lost in Period ÷ Revenue at Start of Period`

## Acquisition & Efficiency Metrics

**10. CAC, Customer Acquisition Cost**
`CAC = Total Sales & Marketing Spend ÷ New Customers Acquired (same period)`

**11. CAC Payback Period**
`CAC Payback (months) = CAC ÷ (Average MRR per new customer × Gross Margin %)`
How many months it takes for a new customer to "pay back" the cost of acquiring them. Under 12–18 months is considered healthy for most B2B SaaS.

**12. LTV, Customer Lifetime Value**
`LTV = (Average Revenue per Account × Gross Margin %) ÷ Revenue Churn Rate`

**13. LTV:CAC Ratio**
`LTV:CAC = LTV ÷ CAC`
Target ≥3:1. Below 1:1 means you're losing money on every customer over their lifetime; above 5:1 can actually signal you're under-investing in growth.

**14. Magic Number**
`Magic Number = (Current Quarter Revenue − Previous Quarter Revenue) × 4 ÷ Previous Quarter S&M Spend`
Measures sales & marketing efficiency at converting spend into new revenue. Above 0.75 is generally considered efficient enough to justify increased S&M investment.

**15. Rule of 40**
`Rule of 40 = Revenue Growth Rate % + Profit Margin %`
A combined score investors use to judge whether a company is balancing growth and profitability, should be ≥40.

**16. Burn Multiple**
`Burn Multiple = Net Burn ÷ Net New ARR`
How much cash it costs to generate a dollar of new ARR. Under 1.5x is considered efficient for growth-stage SaaS; over 2–3x draws investor scrutiny.

## Sales & Pipeline Metrics

**17. Gross Margin**
`Gross Margin = (Revenue − COGS) ÷ Revenue`

**18. SaaS Quick Ratio**
`Quick Ratio = (New MRR + Expansion MRR) ÷ (Churned MRR + Contraction MRR)`
Above 4 is considered strong growth efficiency; below 1 means you're losing MRR faster than you're adding it.

**19. Pipeline Coverage Ratio**
`Pipeline Coverage = Open Pipeline $ ÷ Quota $`
Typical healthy range: 3–4x.

**20. Win Rate**
`Win Rate = Closed-Won Opportunities ÷ (Closed-Won + Closed-Lost Opportunities)`

**21. Sales Cycle Length**
`Sales Cycle Length = Average number of days from Opportunity Created to Closed-Won`

**22. Average Sales Price (ASP)**
`ASP = Total Revenue Closed ÷ Number of Deals Closed`

**23. Expansion Revenue Rate**
`Expansion Revenue Rate = Expansion ARR ÷ Starting ARR`

**24. ARR per Employee**
`ARR per Employee = Total ARR ÷ Total FTE Count`
A capital-efficiency metric investors use to compare how leanly a company is scaling relative to peers.