20 Most Important Startup Metrics Cheat Sheet

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20_Most_Important_Startup_Metrics_Cheat_Sheet

20 Most Important

Startup Metrics

Cheat Sheet


Average Revenue Per User (ARPU)

Usually measured in months, ARPU is the total revenue you’ve

made divided by the number of customers. In other words, the

sum of all your MRR divided by the number of customers.

ARPU =

Total revenue

Number of customers/users

Average Life Span Of Customer (ALSC)

Usually measured in months, the average life span of a

customer is calculated as 1 divided by your monthly churn.

ALSC =

1

Monthly churn

Average Order Value

If you run an e-commerce business, this is an important

benchmark for setting goals.

AOV =

Total revenue

# of orders taken

Monthly Recurring Revenue (MRR)

MRR is the single most important metric for a SaaS startup.

MRR is simply the price paid each month for a subscription.

Use this metric to measure your startup’s growth and gauge

future revenue.

MRR =

The amount owed during a time period

A fixed amount of time (e.g. 12 months)

Annualized Run Rate (ARR)

Also referred to as Annual Recurring Revenue, ARR is simply

the MRR times 12 months.

ARR = MRR * 12

Customer Churn Rate

The customer churn rate is the rate at which your customers

stop paying for your product. Most startups measure this in

a period of 30, 60, or 90 days, to account for inactive users

who may start spending again. Use this metric to guide your

retention efforts, such as administering surveys and conducting

interviews to find out why customers have churned.

Churn =

# of customers who

churn within the period

Total # of customers at

start of period

MRR Churn Rate

The MRR churn rate measures how much MRR you’re losing

through customer churn.

MRR CR =

Amount of MRR cancelled in period

Total MRR at start of period

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Return On Investment (ROI)

The most popular metric for any business, ROI can be used

in several situations, but is mainly used for paid marketing

activities. Use this metric to evaluate the efficiency of your

business activities.

ROI =

Gain from investment - Cost of investment

Cost of investment

Customer Acquisition Cost (CAC)

An important metric when starting marketing activities for your

startup. To calculate your CAC cost, divide all your sales and

marketing expenses (including overhead) in a given period by

the number of new customers added in that period. Use this

metric to figure out how to acquire customers more efficiently.

CAC =

Sum of all sales & marketing expenses

Number of new customers added

Retention Rate

The customer retention rate is the rate at which you are

keeping customers in your company in relation to the number of

customers you had at the beginning of the period. The formula

does not include new customers (hence the subtraction).

RR =

# of customers at end of period -

# of customers acquired during period

# of customers at start of period

Cost of Goods Sold (COGS)

The cost of goods sold includes any costs associated with

running your services, including hosting fees, 3rd party web

fees (CDNs, etc), support personnel costs, customer success or

customer onboarding costs, and more. This does not include

your customer acquisition cost (CAC).

COGS =

Cost associated with running site - CAC

Gross Profit Margin

The gross profit margin represents the percent of total sales

revenue that the company retains after production costs. Be sure to

include all costs associated with the production of your product.

GPM =

Total revenue - COGS

Total revenue

Net Profit Margin

The net profit margin represents how much of your company’s

sales are kept as profit. Your net income must be calculated

first before calculating the net profit margin.

NPM =

Net income

Total revenue

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CAC Payback Period

The CAC payback period is the number of months it takes your

company to earn back the CAC you spent to get a new customer.

CAC PP =

CAC

ARPU * Gross Profit Margin

Compound Annual Growth Rate (CAGR)

The compound annual growth rate gives you a uniform rate

that repesents how much your company is growing annually.

It’s also a metric investors use to measure the return on an

investment over a period of time.

CAGR =

Ending investing value

Beginning investing value

1

( # of years )

- 1

Burn Rate

The burn rate is the rate at which cash is decreasing. For

example, if your company starts the year with 1 million dollars

and you have $500,000 on July 1st, your burn rate equation

would be $500,000/6, which means you’re spending $83,333/

BR =

Total cash position change

Specified time period

month and have 6 months before you run out of cash.

Life Time Value (LTV)

There are several customer life time value formulas that

you can use, but the two mains ones are historic (good)

and predictive (better). The formula to the right is predictive

customer life time value. Use this formula to determine the

long-term value or projected revenue of a customer and

maximum acquisition cost per customer. To calculate LTV,

simply take your revenue per customer (per month) and

subtract all variable costs, then multiply that by the average

lifespan of a customer.

LTV =

(Revenue per customer - Variable costs) * ALSC

Bounce Rate

The bounce rate is the percentage of visitors to your website

who navigate away from the site after viewing only one page.

Lower the bounce rate of your page by using calls to action to

drive users further into your site.

BR =

Total visitors who only viewed one page

Total visitors to a site

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Email Open Rate

Your email open rate is the rate at which your audience is

opening your emails or newsletter. Increase your open rate by

testing subject lines, avoiding spam filters, and cleaning bad

emails for your email list.

OR =

Emails opened

Emails sent - Bounced emails

Total Contract Value (TCV) &

Annual Contract Value (ACV)

TCV and ACV stand for “Total Contract Value” and “Annual

Contract Value”. The TCV is the total value of your account

subscription agreements, while ACV measures the value of the

agreements over a 12-month period. The TCV is not limited to a

specific time period. Make sure the TCV includes all transaction

types, such as charges and fees.

TCV | ACV

If you have any edits to this document, please email marketing@decisive.is.

decisive.is | @DecisiveAds

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