SaaS Metrics Glossary
Definitions for common SaaS metrics and financial terms used in Financier.
A
- ARR
- Annual Recurring Revenue. The total value of recurring revenue normalized to a one-year period. Calculated as MRR × 12. Learn more →
- ARPU
- Average Revenue Per User. The average amount of revenue generated per customer, calculated as Total MRR ÷ Number of Active Customers. Learn more →
C
- Churn
- The rate at which customers cancel their subscriptions or stop paying. Can be measured as customer churn (number of customers lost) or revenue churn (MRR lost). Learn more →
- Churn MRR
- The monthly recurring revenue lost from customers who cancelled their subscriptions entirely. Learn more →
- Cohort
- A group of customers who share a common characteristic, typically the month they signed up. Used to analyze retention and behavior patterns over time.
- Contraction MRR
- The monthly recurring revenue lost from existing customers who downgraded to a lower-priced plan. Learn more →
- Conversion Rate
- The percentage of trial users or leads who become paying customers. Calculated as (Conversions ÷ Total Trials) × 100. Learn more →
- Customer Lifetime
- The average length of time a customer remains subscribed before churning. Often calculated as 1 ÷ Monthly Churn Rate. Learn more →
E
- Expansion MRR
- Additional monthly recurring revenue from existing customers who upgraded to higher-priced plans or purchased add-ons. Learn more →
G
- Gross Revenue
- Total revenue collected before any deductions like refunds, chargebacks, or disputes. Learn more →
L
- LTV
- Lifetime Value. The total revenue expected from a customer over their entire relationship with your business. Calculated as ARPU × Customer Lifetime. Learn more →
- LTV:CAC Ratio
- The ratio of Customer Lifetime Value to Customer Acquisition Cost. A ratio of 3:1 or higher is generally considered healthy. Learn more →
M
- MRR
- Monthly Recurring Revenue. The predictable, recurring revenue generated each month from active subscriptions. Learn more →
N
- Net MRR
- The total change in MRR for a period. Calculated as New MRR + Expansion MRR - Contraction MRR - Churn MRR. Learn more →
- Net Revenue
- Revenue after subtracting refunds, chargebacks, and disputes from gross revenue. Represents actual money earned. Learn more →
- New MRR
- Monthly recurring revenue from brand new customers who just subscribed for the first time. Learn more →
Q
- Quick Ratio
- A measure of growth efficiency. Calculated as (New MRR + Expansion MRR) ÷ (Contraction MRR + Churn MRR). A ratio above 4 indicates healthy growth. Learn more →
R
- Recurring Revenue
- Revenue that is predictable and expected to continue on a regular basis, typically from subscription payments.
- Retention Rate
- The percentage of customers who remain subscribed over a given period. Calculated as (Customers at End - New Customers) ÷ Customers at Start × 100. Learn more →
- Revenue Churn
- The percentage of MRR lost due to cancellations and downgrades. Calculated as (Churned MRR + Contraction MRR) ÷ Starting MRR × 100. Learn more →
S
- SaaS
- Software as a Service. A software distribution model where applications are hosted in the cloud and provided to customers over the internet on a subscription basis.
- Segment
- A group of customers categorized by shared characteristics like plan type, signup date, or behavior patterns. Learn more →
T
- Trial
- A period where potential customers can use the product for free before deciding to subscribe. Learn more →
- Trial Conversion Rate
- The percentage of trial users who become paying customers after their trial period ends. Learn more →