The Language of SaaS

The lifeblood of SaaS. It excludes one-time fees (like implementation) and focuses purely on the predictable revenue engine.

The true measure of growth in a given month. If this number is negative, the business is shrinking regardless of new sales.

A massive 3-year deal has a high TCV, but investors look at ACV to understand the actual annual revenue run-rate.

How much it costs to buy a customer. If CAC is rising faster than LTV, the Go-To-Market (GTM) motion is becoming inefficient.

A leading indicator for future sales. Generally, B2B companies want 3x-4x coverage because they assume they will only win 25-33% of the deals they pitch.

A pure measure of product stickiness. A 50% ratio means the average user logs in 15 out of 30 days a month. Ideal for PLG (Product-Led Growth).

Measures how well you keep your existing revenue without relying on upselling. GRR maxes out at 100%. High GRR means a highly sticky, necessary product.

The holy grail of SaaS. An NDR > 100% means the company grows even if they acquire zero new customers because existing customers are upgrading.

A qualitative survey metric that highly correlates with future churn. If NPS drops, NDR will usually drop 1-2 quarters later.

A quick health check for late-stage SaaS. If the sum is > 40%, the business is balancing growth and burn effectively.

Tells you if you should pour more fuel on the fire. A Magic Number > 0.75 indicates efficient S&M; < 0.5 means you have a leaky bucket.

How many months it takes to earn back the cost of acquiring the customer. Best-in-class startups aim for < 12 months.