Glossary
Every SaaS metric, defined and calculated
Formulas precise enough to implement, worked examples with the arithmetic shown, and the definition choices that make two companies' versions of the same number impossible to compare.
What is a SaaS metrics glossary?
A SaaS metrics glossary is a working reference for the numbers a subscription business runs on: what each term means, the formula that produces it, the inputs that formula needs, and the edge cases that change the answer. This one covers 27 metrics across revenue, retention, customers, efficiency, cash and growth. Every entry states one definition plainly, shows the arithmetic on a worked example, and names the choices — trials, discounts, delinquency, refunds — that quietly make two companies’ versions of the same metric incomparable. Those same choices are configurable per workspace in the product.
9 terms
Revenue
What the business earns, normalised to a common period so that plans, currencies and billing intervals can be compared without mental arithmetic.
Monthly Recurring Revenue
MRRMonthly recurring revenue (MRR) is the monthly-normalised value of every active paid subscription at a point in time: monthly plans at face value, quarterly plans divided by three, annual plans divided by twelve, plus recurring add-ons and less active discounts. It is a snapshot of contracted run rate rather than an accounting figure, so it deliberately excludes one-off charges, setup fees, usage overages and refunds, and it has no definition in GAAP or IFRS.Annual Recurring Revenue
ARRAnnual recurring revenue (ARR) is the annualised value of a subscription business's contracted revenue, calculated in practice as current monthly recurring revenue multiplied by twelve. It is a run rate — a statement of what the next twelve months would produce if nothing changed — not a record of what the business earned in the past twelve months, and the two figures differ sharply for any company that is growing or churning quickly.Average Revenue Per User
ARPUAverage revenue per user (ARPU) is monthly recurring revenue divided by the number of active paying customers, giving the blended monthly value of a single account. It is frequently written ARPA — average revenue per account — and the distinction matters for any product where one account contains several seats, because dividing by seats and dividing by accounts produce different numbers and answer different questions.Annual Contract Value
ACVAnnual contract value (ACV) is the annualised recurring value of a single customer contract, calculated by dividing the contract's total recurring value by its length in years. A three-year, $300,000 agreement has an ACV of $100,000 and a total contract value (TCV) of $300,000; ACV is the figure used to describe deal size and segment a sales motion, because it stays comparable across contracts of different lengths.Expansion MRR
Expansion MRR is the additional monthly recurring revenue generated by existing customers in a period through upgrades, seat additions, add-on purchases and price increases — revenue growth from accounts already on the books rather than from new ones. It is measured as a positive movement against the prior period's MRR, excludes anything from customers acquired in the period, and is the component that allows net revenue retention to exceed 100%.Contraction MRR
Contraction MRR is recurring revenue lost from customers who stayed but now pay less — downgrades to a cheaper plan, removed seats, dropped add-ons and newly applied discounts. It is distinct from churned MRR, which comes from customers who left entirely, and keeping the two separate matters because a shrinking account is a retained relationship with a product or pricing problem, while a churned one is gone.Net New MRR
Net new MRR is the change in monthly recurring revenue over a period, calculated as new plus expansion plus reactivation MRR, minus contraction and churned MRR. It is the single figure that reconciles opening MRR to closing MRR, and its value comes less from the total than from the five components underneath it, which distinguish a business growing from acquisition, from expansion, or merely replacing what it loses.Committed Monthly Recurring Revenue
CMRRCommitted monthly recurring revenue (CMRR) is current MRR adjusted for changes that are already contractually agreed but have not yet taken effect: signed contracts that start later, notified cancellations that have not yet lapsed, and scheduled price or seat changes. It is a forward-looking view of the book that will exist in the near future, and it usually differs from reported MRR most in businesses selling annual contracts with notice periods.Bookings, Billings and Revenue
Bookings, billings and revenue are three distinct measures of the same customer contract at three different moments: bookings record the total value committed when the deal is signed, billings record what has been invoiced, and revenue records what has been earned and recognised in the period. For a business selling annual contracts up front, all three figures can differ substantially in the same month, and only revenue is governed by accounting standards.
7 terms
Retention
Whether the revenue you won last month is still here this month — and what it costs you when it is not.
Churn Rate
Churn rate is the share of customers or recurring revenue lost over a period, most often calculated as the number of customers who cancelled during a month divided by the number active at the start of it. There is no single correct churn rate: customer churn and revenue churn, gross and net, and start-of-period and average denominators all produce different figures from identical data, so a churn rate is only interpretable alongside the definition that produced it.Revenue Churn
Revenue churn is the share of recurring revenue lost from existing customers over a period. Gross revenue churn counts cancellations and downgrades against starting MRR and can never be negative; net revenue churn subtracts expansion from those losses and can go below zero when upgrades from surviving customers outweigh everything lost. Neither version includes revenue from new customers.Net Revenue Retention
NRRNet revenue retention (NRR, also called net dollar retention) is the recurring revenue a fixed group of existing customers generates at the end of a period, expressed as a percentage of what the same group generated at the start, including expansion and after churn and contraction. New customers are excluded entirely. Above 100% means the existing base grew on its own; it does not mean customers are staying, because heavy expansion from a few accounts can cover substantial churn among the rest.Gross Revenue Retention
GRRGross revenue retention (GRR, also called gross dollar retention) is the share of a cohort's starting recurring revenue still present at the end of a period, counting cancellations and downgrades but excluding all expansion. Because expansion is excluded, GRR can never exceed 100%, which makes it the only retention figure a strong upsell quarter cannot flatter.Retention Rate
Retention rate is the share of customers or revenue from the start of a period that is still present at the end, calculated as 100% minus the churn rate over the same period and definition. Customer retention rate is bounded at 100%, while net revenue retention can exceed it, so the two are not interchangeable despite both being described as retention.Involuntary Churn
Involuntary churn is subscription loss caused by payment failure rather than by a customer decision — expired cards, insufficient funds, bank declines and fraud blocks. It is distinct from voluntary churn because the customer still wants the product, which makes it the one category of churn that is directly recoverable through retry logic and card-update prompts rather than through product or pricing changes.Cohort Analysis
Cohort analysis groups customers by when they started and tracks each group separately over elapsed time, producing a triangular table where rows are signup periods and columns are months since signup. It exposes what an aggregate churn rate cannot: whether retention is improving for newer customers, where in the lifecycle customers leave, and whether a flat headline number is hiding a deteriorating base propped up by durable older cohorts.
2 terms
Customers
The people behind the revenue: how many there are, what each is worth, and how long they stay.
Logo Churn
Logo churn is the share of customer accounts lost over a period, counting each account once regardless of what it paid. It is the customer-count view of churn, and comparing it to revenue churn reveals whether the accounts leaving are larger or smaller than average — the two rates diverging is usually more informative than either level on its own.Trial Conversion Rate
Trial conversion rate is the share of trials that become paying subscriptions, calculated as trials converted in a period divided by trials started, cohorted so that both figures describe the same group. It is a funnel metric rather than a retention metric — a trial that expires unconverted was never a customer, and counting it as churn misattributes an acquisition outcome to retention.
6 terms
Efficiency
What growth costs to buy, and how long it takes before a customer has paid for the trouble of acquiring them.
Customer Lifetime Value
LTVCustomer lifetime value (LTV, also written CLV or CLTV) is the total gross profit a business expects to earn from one customer across the whole of their relationship. The standard subscription estimate divides average revenue per account by the customer churn rate and multiplies by gross margin, but that formula assumes every customer has the same constant probability of cancelling every month — an assumption real cohorts violate — so LTV is a directional planning input rather than a measured figure.Customer Acquisition Cost
CACCustomer acquisition cost (CAC) is the total sales and marketing spend required to win one new customer, calculated by dividing that spend over a period by the number of new customers acquired in it. The figure changes materially with the definition chosen: paid CAC counts only media spend against paid-attributed customers, fully-loaded CAC adds salaries, commissions and tooling, and blended CAC divides total spend by every new customer including the ones who arrived organically.LTV to CAC Ratio
LTV:CACThe LTV:CAC ratio divides customer lifetime value by customer acquisition cost to express how many times over an average customer repays the cost of winning them. A ratio around 3:1 is the conventional target for venture-backed SaaS; below 1:1 the business loses money on every customer it acquires, and a very high ratio usually signals under-investment in growth rather than exceptional efficiency.CAC Payback Period
CAC payback period is the number of months of gross profit it takes a new customer to repay the cost of acquiring them, calculated as customer acquisition cost divided by new-customer monthly recurring revenue multiplied by gross margin. Because it measures how fast acquisition spend returns as cash rather than how much it eventually returns, it constrains how quickly a company can grow without outside capital far more directly than the LTV:CAC ratio does.SaaS Quick Ratio
The SaaS quick ratio divides new plus expansion MRR by churned plus contraction MRR, showing how much recurring revenue a company adds for every unit it loses; above 1 the business is growing net of losses. It shares a name with the accounting quick ratio — a balance-sheet liquidity measure of current assets to current liabilities — but the two are unrelated, use different inputs and answer different questions.Gross Margin
Gross margin is the share of revenue remaining after the direct cost of delivering the service — hosting, third-party APIs, payment processing, and the support and customer success spent serving existing customers. In a subscription business it is the multiplier on every other efficiency metric, because it converts revenue into the gross profit that repays acquisition cost, so LTV, LTV:CAC and CAC payback are all wrong whenever the margin figure is wrong.
2 terms
Cash
The gap between revenue recognised and money actually in the account — the number that decides how long you have to fix everything else.
Burn Rate
Burn rate is the rate at which a company consumes cash, usually stated per month. Gross burn is total cash operating outflow; net burn is gross burn minus cash collected, and net burn is the figure that determines runway. Because burn is a cash measure rather than an accounting one, a company can post an accounting loss while burning very little, or post a small loss while burning heavily.Runway
Runway is the number of months a company can operate before it runs out of cash, calculated as cash on hand divided by net monthly burn. It is only as reliable as the burn figure behind it: dividing by a single month's burn, or by a burn that improved because one large annual prepayment happened to land, produces a runway number that will not survive the next quarter.
1 terms
Growth
The rate, composition and durability of growth: the shape an investor reads before they read anything else.
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Frequently asked questions
Why do two analytics tools report different MRR for the same company?
Because MRR is a modelled number, not a bank balance. Tools disagree on whether trials count as revenue, how many days a delinquent subscription keeps counting before it is treated as churned, whether discounts are applied at list price or net, how annual plans are spread across months, how refunds and credits land, and whether internal and test accounts are excluded. Identical Stripe data plus different answers to those six questions produces different MRR. The fix is not finding the one true definition — it is knowing which definition you are using and applying it consistently.
Which subscription metrics should a company track first?
Four carry most of the signal: MRR for the size of the recurring base, net revenue retention for whether existing customers grow or shrink without new sales, gross churn for what is leaking, and runway for how long you have to act on any of it. ARPU, LTV, CAC payback and quick ratio are lenses on those four and become useful once the base numbers are stable and trusted.
How do subscription metrics differ from accounting revenue?
Accounting revenue follows recognition rules: an annual contract billed in January is recognised across twelve months, and the unearned portion sits as deferred revenue until it is delivered. Subscription metrics are forward-looking run-rates — MRR states what the current subscription base would bill in a normal month, regardless of when cash arrived or when revenue is recognised. The two figures rarely match, and neither is wrong; they answer different questions. Reconciling them is ordinary month-end work, not a sign that something is broken.
Are these the same formulas Bastle uses in the product?
Yes. Each entry documents the default definition Bastle applies, and says so wherever the product exposes a choice — the delinquency window, trial handling, refund treatment, coupon and discount rules, and the lookback used for annual churn. Changing one of those settings in a workspace recalculates history against the new rule, and every figure carries the formula and the records behind it. Bastle does not yet keep a versioned record of who changed a setting and when; that is on the roadmap.
Do I need an account to use the glossary or the calculators?
No. Every definition, formula, worked example and calculator here is public and free to use without signing up. An account is only needed if you want these metrics computed from your own billing data — and Bastle is free while in beta, with no card required.
What does it cost to use Bastle?
Bastle is free while in beta. Every feature is included — metrics, Ask, dunning, cancellation insights, forecasting, segmentation and the API — with no card required to start.
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