Key metrics
MRR, ARR, and the revenue metrics that matter
Revenue in SaaS is more nuanced than total sales. The metrics that matter aren't just how much you made — but how predictable, how sticky, and how efficiently you're growing. These are the four numbers every SaaS founder needs to track.
METRIC 01
MRR — Monthly Recurring Revenue
The normalised monthly revenue from all active subscriptions. The most fundamental SaaS metric. Everything else is derived from MRR.
METRIC 02
ARR — Annual Recurring Revenue
MRR × 12. The standard metric for investor reporting and benchmarking. More stable than MRR for businesses with seasonal patterns.
METRIC 03
Net MRR Growth
New MRR + Expansion MRR − Churned MRR. The real growth rate of your business after accounting for what you're losing every month.
METRIC 04
Net Revenue Retention
Revenue retained from existing customers including expansions, divided by starting revenue. Above 100% means your existing customers grow faster than they churn.
The formulas
How the revenue calculator works
Benchmarks
MRR growth benchmarks by stage
Growth rates that look weak at $10M ARR are exceptional at $100M ARR. Context matters — here are the benchmarks investors and operators use to assess SaaS growth health.
| ARR stage | Strong monthly growth | Excellent monthly growth | Investor benchmark |
|---|---|---|---|
| $0–$1M ARR | 10–15%/mo | 15–25%/mo | T2D3 track starts here |
| $1M–$5M ARR | 8–12%/mo | 12–18%/mo | Triple ARR year-on-year |
| $5M–$20M ARR | 5–8%/mo | 10–15%/mo | Triple then double |
| $20M–$50M ARR | 3–5%/mo | 6–10%/mo | Double ARR year-on-year |
| $50M+ ARR | 2–3%/mo | 4–6%/mo | Double ARR remaining target |
The T2D3 rule: The classic SaaS growth benchmark — triple ARR for two years, then double it for three years. A company hitting T2D3 from $1M ARR reaches approximately $72M ARR in year 5. This is the growth trajectory that historically correlates with venture-scale outcomes and is used by investors as a rough qualification filter.
MRR components
The 5 components of MRR movement
MRR never just goes up or down — it's the sum of five distinct movements happening simultaneously. Tracking them separately tells you exactly where to focus.
| Component | Definition | How to improve |
|---|---|---|
| New MRR | Revenue from brand new customers acquired this month | Improve conversion rate, reduce CAC, increase traffic |
| Expansion MRR | Additional revenue from existing customers (upgrades, upsells, more seats) | Build natural upgrade triggers, improve onboarding, usage-based expansion |
| Reactivation MRR | Revenue from previously churned customers who returned | Win-back campaigns, product improvements, re-engagement sequences |
| Contraction MRR | Revenue lost from downgrades (customers moving to lower tiers) | Better tier differentiation, success plans, proactive outreach at risk signals |
| Churned MRR | Revenue lost from cancellations this month | Improve onboarding, reduce time-to-value, add annual plans, exit surveys |
FAQ