The SaaS Metrics That Matter
Summary
A comprehensive reference framework for SaaS metrics from David Sacks (Craft Ventures). This is less a mental model and more a metrics dictionary, but the organizing principle is clear: growth must be efficient and sustainable, and you need the right metrics to distinguish real growth from “fake” growth fueled by uneconomic spending.
Revenue metrics:
- ARR/MRR: Only recurring revenue counts. One-time revenue (services, pilots) is excluded. ARR = 12 x MRR.
- CMGR (Compound Monthly Growth Rate): Normalizes lumpy month-over-month growth. Target: 15%+ below $1M ARR, 10%+ above $1M ARR. 10% CMGR equals ~3x year-over-year growth.
- MRR Components: Retained, Expansion, New Sales, Resurrected, Contraction, Churned. This decomposition reveals the health under the topline number.
Retention metrics:
- Dollar Retention / NRR: Revenue from a cohort vs. its original size. Best SaaS companies hit 120%+ annually. Below 100% = leaky bucket.
- Logo Retention: Percent of customers retained. Benchmarks: 90-95% enterprise, 85% mid-market, 70-80% SMB. Dollar retention matters more.
- Customer Concentration: Red flag if one or two customers dominate revenue. Target: largest customer < 10% of revenue.
Sales efficiency metrics:
- CAC: S&M expense in prior period / new customers in current period (lag accounts for sales cycle).
- ACV:CAC: Annual contract value should exceed acquisition cost.
- CAC Payback: S&M spend / (MRR x Gross Margin). Measures months to break even.
- Magic Number: Net New ARR / prior-period S&M. Target > 1.
- Burn Multiple: Net Burn / Net New ARR. Below 1 is excellent; below 2 is good.
Engagement metrics:
- DAU/MAU: Target 40% on weekdays (users visit ~2x/week).
- DAU/WAU: Target 60% on weekdays (users visit ~3 out of 5 days).
- Paid Engagement: Filter out free users for clearer signal.
Other:
- Gross Margin: Target 75%+ for pure SaaS. Persistently low margins may indicate a “Mechanical Turk” problem (humans performing product capabilities).
- LTV: Cumulative gross profit net of CAC. Healthy cohorts cross $0 before month 12, grow to 3x CAC over time.
Relevance to projects:
- 01-projects/data-marketplace/index — These metrics define what “good” looks like. NRR > 100% means the marketplace is expanding within accounts. Customer concentration is a real risk in a niche data marketplace. Track MRR components from day one.
- 01-projects/squarely-puzzles/index — DAU/MAU and paid engagement are the relevant engagement metrics for a puzzle app. CAC payback matters for any paid acquisition (App Store ads).
- 01-projects/phdata/index — Consulting doesn’t map cleanly to SaaS metrics, but the customer concentration risk is real. The “Mechanical Turk” test is interesting: is the consulting business selling software-like outcomes but delivering them with humans?
- 01-projects/newsletter/index — DAU/MAU equivalent: open rate and click rate. Sponsorship revenue is not recurring in the SaaS sense but could be measured with similar retention/expansion concepts (sponsor retention, ARPS expansion).
Connects to 06-reference/2026-04-03-b2b-saas-pricing-masterclass on value metrics and monetization. The CMGR benchmarks connect to 06-reference/2026-04-03-nathan-barry-saas-scaling-profit-sharing on ConvertKit’s growth trajectory. The burn multiple concept connects to 06-reference/2026-04-03-ladders-of-wealth-creation — bootstrapped businesses implicitly have a burn multiple near zero.
Open Questions
- What does a “SaaS metrics dashboard” look like for 01-projects/data-marketplace/index at the $0-$10K MRR stage? Which metrics matter before product-market fit?
- How do you adapt the Magic Number and CAC Payback for a business with both consulting revenue (01-projects/phdata/index) and product revenue (01-projects/data-marketplace/index)?
- The 120% NRR benchmark assumes expansion revenue — what product mechanisms drive expansion in a data marketplace?