Common formulas: SaaS metrics
Formulas for MRR movement, ARR, net revenue retention, gross churn, and CAC.
A subscription business tracks how its monthly recurring revenue (MRR) moves. New customers add MRR, upgrades expand it, and churn removes it. The ratios on this page show how efficient that growth is.
The formulas come from the SaaS Metrics and SaaS Churn Stress templates. To start from a template, go to Scenario planning → New model, type the template name, and press Enter.
MRR movement
SaaS Metrics has six inputs: Beginning MRR, New MRR, Expansion MRR, Churned MRR, Sales and marketing spend, and New customers.
| Variable | Formula | Example result |
|---|---|---|
| Ending MRR | Beginning MRR + New MRR + Expansion MRR - Churned MRR | 225,000 |
| ARR | Ending MRR * 12 | 2,700,000 |
| Net new MRR | New MRR + Expansion MRR - Churned MRR | 25,000 |
The example results use the template inputs, in the order above: 200,000, 30,000, 10,000, 15,000, 60,000, and 50.
Efficiency ratios
| Variable | Formula | Example result |
|---|---|---|
| Net revenue retention | (Beginning MRR - Churned MRR + Expansion MRR) / Beginning MRR | 97.5% |
| CAC | Sales and marketing spend / New customers | 1,200 |
| Gross churn rate | Churned MRR / Beginning MRR | 7.5% |
Each ratio uses the movement of one period. In a monthly model, these are monthly rates.
A division by zero gives an error. If a month can have no new customers, test for it:
if New customers = 0 then blank else Sales and marketing spend / New customersCarry MRR to the next period
In the template, Beginning MRR is an input in each period. To link the periods, add a Starting MRR input and give Beginning MRR this formula:
if Ending MRR[previous] = blank then Starting MRR else Ending MRR[previous]A reference to [previous] does not make a circular reference.
Drive MRR from a churn rate
SaaS Churn Stress uses a churn rate in place of a churned amount.
| Variable | Formula |
|---|---|
| MRR | if MRR[previous] = blank then Starting MRR else MRR[previous] * (1 - Monthly churn rate) + New MRR per month |
| Churned MRR | MRR * Monthly churn rate |
| Retention rate | 1 - Monthly churn rate |
Patterns in Formula templates
The SaaS Metrics template does not calculate lifetime value or payback. Formula templates in the formula bar has patterns for them:
| Template | Example after you fill it |
|---|---|
| Customer acquisition cost | (Sales payroll + Marketing spend) / New customers |
| CAC payback | CAC / (ARPU * Gross margin) |
| Lifetime value | ARPU * Gross margin / Churn rate |
| Burn multiple | -Net operating cash flow / Net new ARR |
| Magic number | (New ARR + Expansion ARR - Churned ARR) / CAC |
Eigenn inserts each pattern with placeholders. Replace each placeholder with one of your variables.