Calculate SaaS Monthly Recurring Revenue, Annual Recurring Revenue, churn rate, and net revenue retention. Essential metrics for any subscription business.
SaaS Metrics Calculator
MRR
ARR
Churn Rate
Net Revenue Retention
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SaaS Metrics: MRR, ARR, Churn, and NRR Explained
Subscription businesses live and die by a handful of key metrics. Understanding and optimizing these numbers is the difference between sustainable growth and a leaky bucket that requires constant new customer acquisition to survive.
Core SaaS Metric Formulas
MRR = Active Subscribers × ARPU — the most important SaaS metric
NRR (also called Net Dollar Retention) above 100% means your existing customer base grows in revenue even without acquiring new customers — expansions and upgrades more than offset churned revenue. Slack, Snowflake, and Twilio famously had NRRs of 130%+ at their growth peaks. Benchmark: >120% = excellent, 100–120% = healthy, <100% = churn problem.
The Rule of 40
A healthy SaaS business should have a Revenue Growth Rate % + Profit Margin % ≥ 40. A company growing at 50% with -15% margin scores 35 (borderline). A company growing at 20% with 25% margin scores 45 (healthy). This balances growth vs. profitability — it's the most commonly cited SaaS health benchmark by VCs.
Frequently Asked Questions
For B2B SaaS, a monthly churn rate of 0.5–2% is generally acceptable (6–24% annually). Best-in-class B2B SaaS companies achieve below 1% monthly churn. B2C SaaS has higher typical churn (2–8% monthly) due to less stickiness. Annual churn above 20% is a serious warning sign requiring product or onboarding improvements.
MRR (Monthly Recurring Revenue) and ARR (Annual Recurring Revenue) represent the same underlying business — ARR = MRR × 12. MRR is used operationally (tracking month-to-month changes). ARR is used for business valuation and investor reporting. Note: ARR is sometimes calculated differently for companies with many annual contracts — it's the annualized value of current active contracts, which may differ from MRR × 12 if billing is lumpy.
Simple LTV = ARPU / Monthly Churn Rate. If ARPU is $100 and monthly churn is 2%, LTV = $100 / 0.02 = $5,000. More sophisticated calculations account for gross margin: LTV = (ARPU × Gross Margin %) / Churn Rate. The healthy LTV:CAC ratio is typically 3:1 or higher — meaning LTV should be at least 3× the cost to acquire the customer.
Expansion MRR is additional recurring revenue from existing customers — through upgrades to higher plans, purchasing add-ons, exceeding usage limits on usage-based pricing, or adding seats. Expansion MRR is the most efficient growth lever because there's no acquisition cost. Companies with strong expansion MRR often achieve NRR above 100%, meaning they grow revenue without needing to acquire a single new customer.