CAC, LTV, churn, Rule of 40 & more
Revenue & retention
Revenue minus cost to serve (hosting, support)
% of customers lost / month
Upsell revenue from existing customers / month
Acquisition
Rule of 40
Year-over-year, not monthly
EBITDA or FCF margin (can be negative)
Your SaaS metrics
MRR
$20,000
ARR
$240,000
LTV
$800
~25 mo lifetime
CAC
$100
LTV : CAC
8.0×
Aim for 3×+
CAC payback
3.1 mo
Aim for <12 mo
Annual churn
39%
Net Revenue Retention
78%
98% monthly · best-in-class >110% annual
Rule of 40
70
Growth % + profit % ≥ 40
LTV (Lifetime Value)
Gross profit a customer generates over their lifetime. Here: ARPU × gross margin ÷ monthly churn. A higher gross margin and lower churn both raise LTV.
CAC & LTV:CAC
CAC is sales & marketing spend ÷ new customers. The LTV:CAC ratio shows return on acquisition — below 1× you lose money per customer; 3×+ is considered healthy.
CAC Payback
Months of gross profit needed to recover the cost of acquiring a customer. Under 12 months is strong for most SaaS; over 18 strains cash flow.
Net Revenue Retention (NRR)
Revenue kept from existing customers including upsells, excluding new logos. Above 100% means you grow even with zero new customers. We compound (1 − churn + expansion) over 12 months.
Rule of 40
A SaaS health check: year-over-year revenue growth % + profit margin % should total at least 40. It balances growth against profitability — fast-growing companies can run at a loss, mature ones must be profitable.
Annual Churn
The share of customers you'd lose over a year at your current monthly churn, compounded. Even 4%/month compounds to ~39% per year.
These use standard SaaS formulas and are directional, not audited financials. Benchmarks (3× LTV:CAC, <12mo payback, >110% NRR, Rule of 40) are widely used rules of thumb.
You've got the numbers — now ship the features that move them. We help founders scale their app or SaaS with new features, performance, and growth experiments. No bloated retainers, just fast execution.