How to predictably measure if your SaaS is growing

SaaS growth = $$$ so measuring your growth reliably is super important (ideally in a fixed cadence).

At the end of each year/quarter you can analyze your performance for that time period. And at the same time, make projections based on the data you have observed. There are 3 key metrics to consider. It takes into account your revenue, your customers, your LTV, churn, and your CAC. (Separate the signal from the noise)

#1: New MRR/ARR added

This metric measures how much revenue “R” is added to your business over “N” period of time by “C” new customers. Where r/C gives you the average revenue per user (ARPU) over “N” months/years.

#2: Churned MRR/ARR

This metric measures the revenue lost “RL” across “N” period of time due to “CL” customers leaving. Calculate churn rate = (Lost customers (CL) / Total customers at the start (C)) * 100.

#3: Expansion MRR/ARR

This metric measures the percentage expansion in MRR by existing customers upgrading/expanding their subscription. Measure your revenue growth using this formula: Net MRR = New MRR from new customers + Expansion MRR - churned MRR.Expansion MRR here is the MRR added across N-period of time by paying customer upgrading to a higher paying tier.

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