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.
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