Plain-language definitions for MRR, churn, conversion, and the operating metrics that drive the decision feed.
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Quick definitions, clearer onboarding copy, and SEO pages that still feel connected to the product brand.
These entries are designed to be easy to scan while still aligning with the product's decision-first framing.
MRR
Monthly Recurring Revenue (MRR) is the predictable subscription revenue normalized to a monthly period. It is the single most-watched metric for subscription businesses because it strips out one-time charges and normalises annual plans so you can track momentum month-over-month.
Churn Rate
Churn rate measures the percentage of customers or revenue lost during a period. Monthly customer churn above 3% is a warning sign; best-in-class SaaS companies keep it below 1.5%. Revenue churn (also called MRR churn) is usually more important than customer churn because losing a high-value subscriber hurts more than losing a low-value one.
ARR
Annual Recurring Revenue (ARR) is MRR multiplied by 12. It is commonly used for sales-driven SaaS companies with annual contracts. Investors and acquirers often use ARR multiples to value SaaS businesses.
Trial Conversion Rate
Trial conversion rate is the percentage of free-trial users who upgrade to a paid plan within a given window (typically 14–30 days). Industry median is around 15%; top-quartile products exceed 25%. Low conversion usually points to activation problems rather than pricing issues.
LTV
Lifetime Value (LTV) estimates the total revenue a business can expect from a single customer account. A common formula is Average Revenue Per Account (ARPA) divided by churn rate. A healthy SaaS business targets an LTV:CAC ratio of at least 3:1.
CAC
Customer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers acquired in the same period. For sustainable growth, CAC payback should be under 12 months for SMB SaaS and under 18 months for enterprise.
ARPU
Average Revenue Per User (ARPU) — also called ARPA when measured per account — is MRR divided by the number of paying customers. Rising ARPU over time signals successful expansion revenue from upsells or tier upgrades.
Expansion MRR
Expansion MRR is revenue gained from existing customers through upsells, cross-sells, or seat additions. When expansion MRR exceeds churn MRR, the company achieves 'negative churn', meaning the existing base grows even without adding new customers.
NRR
Net Revenue Retention (NRR) measures how much revenue is retained from a cohort of existing customers over 12 months, including expansions and contractions. NRR above 100% means the existing base is growing on its own. World-class SaaS businesses often exceed 120% NRR.
CAC Payback
CAC payback period is the number of months needed for a new customer to generate enough gross profit to cover their acquisition cost. Calculated as CAC divided by (ARPA × gross margin). Shorter payback periods mean the business needs less capital to fund growth.
Activation Rate
Activation rate is the percentage of new signups who reach a defined 'aha moment' — the first action that correlates with long-term retention. Improving activation is usually the fastest lever to increase trial conversion without changing pricing.
Cohort Retention
Cohort retention tracks the percentage of users from a specific signup period (cohort) who remain active at each subsequent month. A retention curve that flattens above 30–40% indicates strong product-market fit. Steep early drop-offs signal onboarding problems.
MRR Growth Rate
MRR growth rate is the month-over-month percentage increase in Monthly Recurring Revenue. High-growth SaaS targets 15–20% monthly growth in early stages. Growth rate naturally decelerates as the base grows larger.
Payment Failure Rate
Payment failure rate is the percentage of subscription renewal attempts that fail in a billing cycle. Rates above 3% indicate a need for a dunning strategy — automated retry sequences and customer outreach to recover failed charges before accounts cancel.
Session Conversion Rate
Session-to-signup conversion rate is the percentage of website sessions that result in a new account registration. Industry averages range from 2–5% for SaaS landing pages. Improvements usually come from clearer value propositions, reduced form friction, or stronger social proof.
Gross Margin
Gross margin is revenue minus cost of goods sold (COGS), expressed as a percentage of revenue. SaaS COGS typically includes hosting, support, and third-party software. Healthy SaaS gross margins are 70–85%. High gross margin is what makes SaaS unit economics so attractive to investors.
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