finance-metrics-quickref

SKILL.md

Purpose

Quick reference for any SaaS finance metric without deep teaching. Use this when you need a fast formula lookup, benchmark check, or decision framework reminder. For detailed explanations, calculations, and examples, see the related deep-dive skills.

This is not a teaching tool—it's a cheat sheet optimized for speed. Scan, find, apply.

Key Concepts

Metric Categories

Metrics are organized into four families:

Revenue & Growth — Top-line money (revenue, ARPU, ARPA, MRR/ARR, churn, NRR, expansion)

Unit Economics — Customer-level profitability (CAC, LTV, payback, margins)

Capital Efficiency — Cash management (burn rate, runway, OpEx, net income)

Efficiency Ratios — Growth vs. profitability balance (Rule of 40, magic number)

When to Use This Skill
Use this when:

You need a quick formula or benchmark

You're preparing for a board meeting or investor call

You're evaluating a decision and need to check which metrics matter

You want to identify red flags quickly

Don't use this when:

You need detailed calculation guidance (use saas-revenue-growth-metrics or saas-economics-efficiency-metrics)

You're learning these metrics for the first time (start with deep-dive skills)

You need examples and common pitfalls (covered in related skills)

Application

All Metrics Reference Table

Metric
Formula
What It Measures
Good Benchmark
Red Flag

Revenue
Total sales before expenses
Top-line money earned
Growth rate >20% YoY (varies by stage)
Revenue growing slower than costs

ARPU
Total Revenue / Total Users
Revenue per individual user
Varies by model; track trend
ARPU declining cohort-over-cohort

ARPA
MRR / Active Accounts
Revenue per customer account
SMB: $100-$1K; Mid: $1K-$10K; Ent: $10K+
High ARPA + low ARPU (undermonetized seats)

ACV
Annual Recurring Revenue per Contract
Annualized contract value
SMB: $5K-$25K; Mid: $25K-$100K; Ent: $100K+
ACV declining (moving downmarket unintentionally)

MRR/ARR
MRR × 12 = ARR
Predictable recurring revenue
Growth + quality matter; track components
New MRR declining while churn stable/growing

Churn Rate
Customers Lost / Starting Customers
% of customers who cancel
Monthly <2% great, <5% ok; Annual <10% great
Churn increasing cohort-over-cohort

NRR
(Start ARR + Expansion - Churn - Contraction) / Start ARR × 100
Revenue retention + expansion
>120% excellent; 100-120% good; 90-100% ok
NRR <100% (base is contracting)

Expansion Revenue
Upsells + Cross-sells + Usage Growth
Additional revenue from existing customers
20-30% of total revenue
Expansion <10% of MRR

Quick Ratio
(New MRR + Expansion MRR) / (Churned MRR + Contraction)
Revenue gains vs. losses
>4 excellent; 2-4 healthy; <2 leaky bucket
Quick Ratio <2 (leaky bucket)

Gross Margin
(Revenue - COGS) / Revenue × 100
% of revenue after direct costs
SaaS: 70-85% good; <60% concerning
Gross margin <60% or declining

CAC
Total S&M Spend / New Customers
Cost to acquire one customer
Varies: Ent $10K+ ok; SMB <$500
CAC increasing while LTV flat

LTV
ARPU × Gross Margin % / Churn Rate
Total revenue from one customer
Must be 3x+ CAC; varies by segment
LTV declining cohort-over-cohort

LTV:CAC
LTV / CAC
Unit economics efficiency
3:1 healthy; <1:1 unsustainable; >5:1 underinvesting
LTV:CAC <1.5:1

Payback Period
CAC / (Monthly ARPU × Gross Margin %)
Months to recover CAC
<12 months great; 12-18 ok; >24 concerning
Payback >24 months (cash trap)

Contribution Margin
(Revenue - All Variable Costs) / Revenue × 100
True contribution after variable costs
60-80% good for SaaS; <40% concerning
Contribution margin <40%

Burn Rate
Monthly Cash Spent - Revenue
Cash consumed per month
Net burn <$200K manageable early; <$500K growth
Net burn accelerating

Runway
Cash Balance / Monthly Net Burn
Months until money runs out
12+ months good; 6-12 ok; <6 crisis
Runway <6 months

OpEx
S&M + R&D + G&A
Costs to run the business
Should grow slower than revenue
OpEx growing faster than revenue

Net Income
Revenue - All Expenses
Actual profit/loss
Early negative ok; mature 10-20%+ margin
Losses accelerating without growth

Rule of 40
Revenue Growth % + Profit Margin %
Balance of growth vs. efficiency
>40 healthy; 25-40 ok; <25 concerning
Rule of 40 <25

Magic Number
(Q Revenue - Prev Q Revenue) × 4 / Prev Q S&M
S&M efficiency
>0.75 efficient; 0.5-0.75 ok; <0.5 fix GTM
Magic Number <0.5

Operating Leverage
Revenue Growth vs. OpEx Growth
Scaling efficiency
Revenue growth > OpEx growth
OpEx growing faster than revenue

Gross vs. Net Revenue
Net = Gross - Discounts - Refunds - Credits
What you actually keep
Refunds <10%; discounts <20%
Refunds >10% (product problem)

Revenue Concentration
Top N Customers / Total Revenue
Dependency on largest customers
Top customer <10%; Top 10 <40%
Top customer >25% (existential risk)

Revenue Mix
Product/Segment Revenue / Total Revenue
Portfolio composition
No single product >60% ideal
Single product >80% (no diversification)

Cohort Analysis
Group customers by join date; track behavior
Whether business improving or degrading
Recent cohorts same/better than old
Newer cohorts perform worse

CAC Payback by Channel
CAC / Monthly Contribution (by channel)
Payback by acquisition channel
Compare across channels
One channel far worse than others

Gross Margin Payback
CAC / (Monthly ARPU × Gross Margin %)
Payback using actual profit
Typically 1.5-2x simple payback
Payback using margin >36 months

Unit Economics
Revenue per unit - Cost per unit
Profitability of each "unit"
Positive contribution required
Negative contribution margin

Segment Payback
CAC / Monthly Contribution (by segment)
Payback by customer segment
Compare to allocate resources
One segment unprofitable

Incrementality
Revenue caused by action - Baseline
True impact of marketing/promo
Measure with holdout tests
Celebrating revenue that would've happened anyway

Working Capital
Cash timing between revenue and collection
Cash vs. revenue timing
Annual upfront > monthly billing
Long payment terms killing runway

Quick Decision Frameworks

Use these frameworks to combine metrics for common PM decisions.

Framework 1: Should We Build This Feature?

Ask:

Revenue impact? Direct (pricing, add-on) or indirect (retention, conversion)?

Margin impact? What's the COGS? Does it dilute margins?

ROI? Revenue impact / Development cost

Build if:

ROI >3x in year one (direct monetization), OR

LTV impact >10x development cost (retention), OR

Strategic value overrides short-term ROI

Don't build if:

Negative contribution margin even with optimistic adoption

Payback period exceeds average customer lifetime

Metrics to check: Revenue, Gross Margin, LTV, Contribution Margin

Framework 2: Should We Scale This Acquisition Channel?

Ask:

Unit economics? CAC, LTV, LTV:CAC ratio

Cash efficiency? Payback period

Customer quality? Cohort retention, NRR by channel

Scalability? Magic Number, addressable volume

Scale if:

LTV:CAC >3:1 AND

Payback <18 months AND

Customer quality meets/beats other channels AND

Magic Number >0.75

Don't scale if:

LTV:CAC <1.5:1 AND

No clear path to improvement

Metrics to check: CAC, LTV, LTV:CAC, Payback Period, NRR, Magic Number

Framework 3: Should We Change Pricing?

Ask:

ARPU/ARPA impact? Will revenue per customer increase?

Conversion impact? Help or hurt trial-to-paid conversion?

Churn impact? Create churn risk or reduce it?

NRR impact? Enable expansion or create contraction?

Implement if:

Net revenue impact positive after churn risk

Can test with segment before broad rollout

Don't change if:

High churn risk without offsetting expansion

Can't test hypothesis before committing

Metrics to check: ARPU, ARPA, Churn Rate, NRR, CAC Payback

Framework 4: Is the Business Healthy?

Check by stage:

Early Stage (Pre-$10M ARR):

Growth Rate >50% YoY

LTV:CAC >3:1

Gross Margin >70%

Runway >12 months

Growth Stage ($10M-$50M ARR):

Growth Rate >40% YoY

NRR >100%

Rule of 40 >40

Magic Number >0.75

Scale Stage ($50M+ ARR):

Growth Rate >25% YoY

NRR >110%

Rule of 40 >40

Profit Margin >10%

Metrics to check: Revenue Growth, NRR, LTV:CAC, Rule of 40, Magic Number, Gross Margin

Red Flags by Category

Revenue & Growth Red Flags

Red Flag
What It Means
Action

Churn increasing cohort-over-cohort
Product-market fit degrading
Stop scaling acquisition; fix retention first

NRR <100%
Base is contracting
Fix expansion or reduce churn before scaling

Revenue churn > logo churn
Losing big customers
Investigate why high-value customers leave

Quick Ratio <2
Leaky bucket (barely outpacing losses)
Fix retention before scaling acquisition

Expansion revenue <10% of MRR
No upsell/cross-sell engine
Build expansion paths

Revenue concentration >50% in top 10 customers
Existential dependency risk
Diversify customer base

Unit Economics Red Flags

Red Flag
What It Means
Action

LTV:CAC <1.5:1
Buying revenue at a loss
Reduce CAC or increase LTV before scaling

Payback >24 months
Cash trap (long cash recovery)
Negotiate annual upfront or reduce CAC

Gross margin <60%
Low profitability per dollar
Increase prices or reduce COGS

CAC increasing while LTV flat
Unit economics degrading
Optimize conversion or reduce sales cycle

Contribution margin <40%
Unprofitable after variable costs
Cut variable costs or increase prices

Capital Efficiency Red Flags

Red Flag
What It Means
Action

Runway <6 months
Survival crisis
Raise capital immediately or cut burn

Net burn accelerating without revenue growth
Burning faster without results
Cut costs or increase revenue urgency

OpEx growing faster than revenue
Negative operating leverage
Freeze hiring; optimize spend

Rule of 40 <25
Burning cash without growth
Improve growth or cut to profitability

Magic Number <0.5
S&M engine broken
Fix GTM efficiency before scaling spend

When to Use Which Metric

Prioritizing features:

Revenue impact → Revenue, ARPU, Expansion Revenue

Margin impact → Gross Margin, Contribution Margin

ROI → LTV impact, Development cost

Evaluating channels:

Acquisition cost → CAC, CAC by Channel

Customer value → LTV, NRR by Channel

Payback → Payback Period, CAC Payback by Channel

Scalability → Magic Number

Pricing decisions:

Monetization → ARPU, ARPA, ACV

Impact → Churn Rate, NRR, Expansion Revenue

Efficiency → CAC Payback (will pricing change affect it?)

Business health:

Growth → Revenue Growth, MRR/ARR Growth

Retention → Churn Rate, NRR, Quick Ratio

Economics → LTV:CAC, Payback Period, Gross Margin

Efficiency → Rule of 40, Magic Number, Operating Leverage

Survival → Burn Rate, Runway

Board/investor reporting:

Key metrics: ARR, Revenue Growth %, NRR, LTV:CAC, Rule of 40, Magic Number, Burn Rate, Runway

Stage-specific: Early stage emphasize growth + unit economics; Growth stage emphasize Rule of 40 + Magic Number; Scale stage emphasize profitability + efficiency

Examples

Example 1: Feature Investment Sanity Check

You are deciding whether to build a premium export feature.

Use Framework 1 (Should We Build This Feature?)

Pull baseline metrics: ARPU, Gross Margin, LTV, Contribution Margin

Model optimistic, base, and downside adoption

Reject if contribution margin turns negative in downside case

Quick output:

Base case ROI: 3.8x

Contribution margin impact: +4 points

Decision: Build now, with a 90-day post-launch check on churn and expansion

Example 2: Channel Scale Decision

Paid social is generating many signups but weak retention.

Use Framework 2 (Should We Scale This Acquisition Channel?)

Check CAC, LTV:CAC, Payback Period, and NRR by channel

Compare against best-performing channel, not company average

Quick output:

LTV:CAC: 1.6:1

Payback: 26 months

NRR: 88%

Decision: Do not scale; cap spend and run targeted optimization tests

Common Pitfalls

Using blended company averages instead of cohort or channel-level metrics

Scaling acquisition when Quick Ratio is weak and retention is deteriorating

Treating high LTV:CAC as sufficient without checking payback and runway impact

Raising prices based on ARPU lift alone without modeling churn and contraction

Comparing benchmarks across mismatched company stages or business models

Tracking many metrics without a clear decision question

References

Related Skills (Deep Dives)

saas-revenue-growth-metrics — Detailed guidance on revenue, retention, and growth metrics (13 metrics)

saas-economics-efficiency-metrics — Detailed guidance on unit economics and capital efficiency (17 metrics)

feature-investment-advisor — Uses these metrics to evaluate feature ROI

acquisition-channel-advisor — Uses these metrics to evaluate channel viability

finance-based-pricing-advisor — Uses these metrics to evaluate pricing changes

business-health-diagnostic — Uses these metrics to diagnose business health

External Resources

Bessemer Venture Partners: "SaaS Metrics 2.0" — Comprehensive SaaS benchmarking

David Skok (Matrix Partners): "SaaS Metrics" blog series — Deep dive on unit economics

Tomasz Tunguz (Redpoint): SaaS benchmarking research and blog

ChartMogul, Baremetrics, ProfitWell: SaaS analytics platforms with metric definitions

SaaStr: Annual SaaS benchmarking surveys

Provenance

Adapted from research/finance/Finance_QuickRef.md

Formulas from research/finance/Finance for Product Managers.md

Decision frameworks from research/finance/Finance_For_PMs.Putting_It_Together_Synthesis.md