SaaS metrics by stage: what to track now

The SaaS metrics worth your time depend on your stage. Before revenue you need two: net burn and your runway date. With your first customers, add MRR and the reasons each customer stays or leaves. Unit economics (CAC, LTV, payback) only mean something once sales repeat, and efficiency ratios like the burn multiple once you are spending investor money on growth. Tracking a metric before it can mean anything wastes time and gives you false comfort.

Below, one company goes through all four stages, with numbers at each one.

Stage 1: before revenue

Two founders, €180,000 in the bank, spending €12,000 a month. Runway is 180,000 / 12,000 = 15 months.

The question at this stage is how long you can keep trying. So track:

• Net burn, as a three-month average so one annual invoice does not swing it.
• The runway date: the month cash reaches zero, written as a month, not as a count of months.

Everything with "customer" in its name can wait. There is nothing to measure yet, and a spreadsheet of zeros teaches you nothing. The decision these two numbers drive is when you need either revenue or a raise, and how far back from the runway date that work has to start.

Stage 2: the first paying customers

A year in, the company has 16 customers and €3,200 of MRR, about €200 each. The largest pays €600 a month.

Now the question is whether people keep paying, and why. Track:

• MRR, split into new, expansion, contraction and churned so you can see why it moved.
• Every cancellation by name, with the reason in one line.
• The biggest customer's share of MRR: 600 / 3,200 = 19%.

At 16 customers, percentages mislead. One cancellation is 6.25% customer churn for the month; two in a bad month reads as 12.5% and looks like a crisis. The list of names and reasons tells you far more than the rate. The same goes for concentration: one customer at 19% is normal this early, but if it climbs past a third, stress-test what happens if they leave.

Hold off on lifetime value. LTV divides by churn, and four months of churn data from 16 customers can put it anywhere. Hold off on CAC too, while the founders do all the selling: the main cost is your own time, which no formula prices well.

Stage 3: sales start to repeat

Two years in: 110 customers, €22,000 of MRR, still about €200 per account. There is a part-time marketer, some paid acquisition and a steady flow of sign-ups. Now it makes sense to ask what a customer costs and what one is worth.

Take one quarter. The company spent €27,000 on sales and marketing, counting the marketer's pay as well as ads and tools, and won 36 customers.

CAC            = 27,000 / 36                = €750
gross profit   = €200 x 80% gross margin    = €160 per customer per month
CAC payback    = 750 / 160                  = 4.7 months
revenue churn  = 440 churned / 22,000 start = 2% a month
LTV            = 160 / 0.02                 = €8,000
LTV : CAC      = 8,000 / 750                = 10.7

David Skok's SaaS Metrics 2.0 gives the two guidelines most investors still use: LTV should be more than three times CAC, and the best businesses recover CAC in five to seven months, with profitability looking weak once payback runs past twelve. He is explicit that these are guidelines, and he frames them as a signal for when to invest harder in growth.

This company passes both. The number to distrust is the LTV. A 2% monthly churn rate implies customers stay 50 months on average, and the company has only been selling for two years, so half of that lifetime is an extrapolation. Payback is the safer of the two because it only needs the next five months to go as planned.

Add two retention numbers at this stage:

• Revenue churn: churned MRR in the month divided by MRR at the start. The churn calculator shows customer and revenue churn side by side.
• Net revenue retention: what the customers you had a year ago pay you today, divided by what they paid then. Above 100% means expansion outweighs churn in the existing base.

Stage 4: spending investor money on growth

After a seed round, the company grows to €1.2M of ARR. Over the last twelve months it burned €900,000 net and added €450,000 of net new ARR.

The question now is whether growth is worth its price. The burn multiple answers it:

burn multiple = net burn / net new ARR = 900,000 / 450,000 = 2.0x

David Sacks, who named the ratio, gives the example of a company burning $2M in a quarter to add $1M of ARR and calls that 2x multiple reasonable for an early-stage startup. He calls 5x terrible, and says that needing 3x or more is a sign product-market fit is weaker than it looks (The Burn Multiple, 2020).

Later still, the Rule of 40 folds growth and profit margin into one score. It is built for companies at a scale this example has not reached, which is why it sits last.

The mistake: using a later stage's metrics

The most common error is tracking the metrics of a company two stages ahead of yours. LTV computed from a few months of churn, a customer churn rate on a base of 16, CAC that leaves out salaries because only the ad spend is easy to find: each produces a confident number that describes nothing. Before sales repeat, runway, MRR growth and the reasons customers leave say more about the company than any of those ratios.

The opposite mistake happens too: a company at stage 3 still watching only MRR, missing that each new customer costs more than the last.

The whole set on one card

The "about 50 customers" line is our rule of thumb: roughly the point where a single cancellation stops moving the rate by more than a couple of points.

Where the numbers come from

Plainhub keeps the stage 1 and 2 numbers current from what you record: cash, net burn, runway, MRR and your biggest customer's share of it, with a warning once that share passes 30%. It does not calculate CAC, LTV, NRR or the burn multiple. For those, use the CAC calculator, the LTV calculator and the burn multiple calculator once a quarter, with the same definitions each time so the trend means something.