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20 Most Important Startup Metrics Cheat Sheet

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<strong>20</strong> <strong>Most</strong> <strong>Important</strong><br />

<strong>Startup</strong> <strong>Metrics</strong><br />

<strong>Cheat</strong> <strong>Sheet</strong>

Average Revenue Per User (ARPU)<br />

Usually measured in months, ARPU is the total revenue you’ve<br />

made divided by the number of customers. In other words, the<br />

sum of all your MRR divided by the number of customers.<br />

ARPU =<br />

Total revenue<br />

Number of customers/users<br />

Average Life Span Of Customer (ALSC)<br />

Usually measured in months, the average life span of a<br />

customer is calculated as 1 divided by your monthly churn.<br />

ALSC =<br />

1<br />

Monthly churn<br />

Average Order Value<br />

If you run an e-commerce business, this is an important<br />

benchmark for setting goals.<br />

AOV =<br />

Total revenue<br />

# of orders taken<br />

Monthly Recurring Revenue (MRR)<br />

MRR is the single most important metric for a SaaS startup.<br />

MRR is simply the price paid each month for a subscription.<br />

Use this metric to measure your startup’s growth and gauge<br />

future revenue.<br />

MRR =<br />

The amount owed during a time period<br />

A fixed amount of time (e.g. 12 months)<br />

Annualized Run Rate (ARR)<br />

Also referred to as Annual Recurring Revenue, ARR is simply<br />

the MRR times 12 months.<br />

ARR = MRR * 12<br />

Customer Churn Rate<br />

The customer churn rate is the rate at which your customers<br />

stop paying for your product. <strong>Most</strong> startups measure this in<br />

a period of 30, 60, or 90 days, to account for inactive users<br />

who may start spending again. Use this metric to guide your<br />

retention efforts, such as administering surveys and conducting<br />

interviews to find out why customers have churned.<br />

Churn =<br />

# of customers who<br />

churn within the period<br />

Total # of customers at<br />

start of period<br />

MRR Churn Rate<br />

The MRR churn rate measures how much MRR you’re losing<br />

through customer churn.<br />

MRR CR =<br />

Amount of MRR cancelled in period<br />

Total MRR at start of period<br />

Return On Investment (ROI)<br />

The most popular metric for any business, ROI can be used<br />

in several situations, but is mainly used for paid marketing<br />

activities. Use this metric to evaluate the efficiency of your<br />

ROI =<br />

Gain from investment - Cost of investment<br />

Cost of investment<br />

Customer Acquisition Cost (CAC)<br />

An important metric when starting marketing activities for your<br />

startup. To calculate your CAC cost, divide all your sales and<br />

marketing expenses (including overhead) in a given period by<br />

the number of new customers added in that period. Use this<br />

metric to figure out how to acquire customers more efficiently.<br />

CAC =<br />

Sum of all sales & marketing expenses<br />

Number of new customers added<br />

Retention Rate<br />

The customer retention rate is the rate at which you are<br />

keeping customers in your company in relation to the number of<br />

customers you had at the beginning of the period. The formula<br />

does not include new customers (hence the subtraction).<br />

RR =<br />

# of customers at end of period -<br />

# of customers acquired during period<br />

# of customers at start of period<br />

Cost of Goods Sold (COGS)<br />

The cost of goods sold includes any costs associated with<br />

fees (CDNs, etc), support personnel costs, customer success or<br />

customer onboarding costs, and more. This does not include<br />

your customer acquisition cost (CAC).<br />

COGS =<br />

Cost associated with running site - CAC<br />

Gross Profit Margin<br />

The gross profit margin represents the percent of total sales<br />

revenue that the company retains after production costs. Be sure to<br />

include all costs associated with the production of your product.<br />

GPM =<br />

Total revenue - COGS<br />

Total revenue<br />

Net Profit Margin<br />

The net profit margin represents how much of your company’s<br />

sales are kept as profit. Your net income must be calculated<br />

first before calculating the net profit margin.<br />

NPM =<br />

Net income<br />

Total revenue<br />

CAC Payback Period<br />

The CAC payback period is the number of months it takes your<br />

company to earn back the CAC you spent to get a new customer.<br />

CAC PP =<br />

CAC<br />

ARPU * Gross Profit Margin<br />

Compound Annual Growth Rate (CAGR)<br />

The compound annual growth rate gives you a uniform rate<br />

that repesents how much your company is growing annually.<br />

It’s also a metric investors use to measure the return on an<br />

investment over a period of time.<br />

CAGR =<br />

Ending investing value<br />

Beginning investing value<br />

1<br />

( # of years )<br />

- 1<br />

Burn Rate<br />

The burn rate is the rate at which cash is decreasing. For<br />

example, if your company starts the year with 1 million dollars<br />

and you have \$500,000 on July 1st, your burn rate equation<br />

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

BR =<br />

Total cash position change<br />

Specified time period<br />

month and have 6 months before you run out of cash.<br />

Life Time Value (LTV)<br />

There are several customer life time value formulas that<br />

you can use, but the two mains ones are historic (good)<br />

and predictive (better). The formula to the right is predictive<br />

customer life time value. Use this formula to determine the<br />

long-term value or projected revenue of a customer and<br />

maximum acquisition cost per customer. To calculate LTV,<br />

simply take your revenue per customer (per month) and<br />

subtract all variable costs, then multiply that by the average<br />

lifespan of a customer.<br />

LTV =<br />

(Revenue per customer - Variable costs) * ALSC<br />

Bounce Rate<br />

The bounce rate is the percentage of visitors to your website<br />

who navigate away from the site after viewing only one page.<br />

Lower the bounce rate of your page by using calls to action to<br />

drive users further into your site.<br />

BR =<br />

Total visitors who only viewed one page<br />

Total visitors to a site<br />

Email Open Rate<br />

Your email open rate is the rate at which your audience is<br />

testing subject lines, avoiding spam filters, and cleaning bad<br />

emails for your email list.<br />

OR =<br />

Emails opened<br />

Emails sent - Bounced emails<br />

Total Contract Value (TCV) &<br />

Annual Contract Value (ACV)<br />

TCV and ACV stand for “Total Contract Value” and “Annual<br />

Contract Value”. The TCV is the total value of your account<br />

subscription agreements, while ACV measures the value of the<br />

agreements over a 12-month period. The TCV is not limited to a<br />

specific time period. Make sure the TCV includes all transaction<br />

types, such as charges and fees.<br />

TCV | ACV<br />

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