Money, Pricing & Model

What metrics should I actually track as an early-stage SaaS founder?

A starting point

Early on, obsess over MRR growth, churn, gross margin, and CAC payback, ignore vanity metrics like downloads and pageviews. Net revenue retention tells you if the business compounds without adding new customers. Track a short list religiously in a weekly review rather than a giant dashboard nobody reads.

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16 Startup Metrics

From a16z by Andreessen Horowitz (a16z) ~15 min read

Why we picked it

The reference primer on the metrics and market-sizing logic investors use, including bottom-up market sizing that keeps founders honest about how big a market really is. Canonical a16z source.

  • Size markets bottom-up from customer count and willingness to pay
  • Know the metrics that actually signal a healthy business
  • Distinguish real traction from vanity metrics
  • Use consistent definitions when comparing yourself to the market
Open a16z.com →
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SaaS Metrics 2.0, Detailed Definitions

From forentrepreneurs.com by David Skok long-form reference

Why we picked it

David Skok's For Entrepreneurs work is the foundational, near-universally cited source on SaaS unit economics and modeling. It's where the LTV:CAC and CAC-payback conventions were popularized.

  • Unit economics (LTV:CAC and months to recover CAC) reveal long-term profitability
  • Simple LTV formulas break when revenue expands over a customer's lifetime
  • Build financial models from real drivers, not top-down market-share guesses
Open forentrepreneurs.com →
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The SaaS Metrics That Matter

From sacks.substack.com by David Sacks essay

Why we picked it

David Sacks (PayPal, Yammer, Craft Ventures) distills the metrics that actually predict a SaaS company's health, including the burn multiple he popularized. Sharp, operator-grade, and opinionated.

  • Net revenue retention and the burn multiple reveal true capital efficiency
  • Focus on a small set of metrics reviewed on a strict weekly cadence
  • Growth and profitability must be balanced (the Rule of 40)
Open sacks.substack.com →

People also ask

What are unit economics and why do they matter? Unit economics is the profit or loss on a single customer or unit, strip away the noise and ask 'do I make money on one customer?' If the answer is... Beginner 3 resources → How do I calculate CAC (customer acquisition cost) and LTV? CAC = total sales and marketing spend divided by new customers acquired in that period, count everything, not just ad spend. LTV = the profit (not ... Intermediate 3 resources → What is a good LTV to CAC ratio? The rule of thumb is LTV:CAC of at least 3:1, earn back roughly three times what it costs to acquire a customer. Below 1:1 you lose money on every ... Intermediate 3 resources → How do I build a simple financial model or revenue projection? Build bottom-up from real drivers, leads, conversion rate, price, churn, not top-down from 'we'll grab 1% of a huge market.' A useful early model f... Intermediate 3 resources → What is churn and how much churn is too much? Churn is the rate customers leave, and it silently caps your growth because you're refilling a leaky bucket. For SMB SaaS, ~3-5% monthly is common ... Intermediate 2 resources → What tools should I use to track competitors and market landscape? Start free and manual before you pay for anything: Google Alerts and their newsletter for moves, G2/Capterra reviews for weaknesses, Crunchbase for... Intermediate 2 resources →