The Complete Guide to SaaS Revenue Metrics
By Arshi Khan, Founder of Just4Marketing · Last reviewed October 2026
Subscription businesses live and die by a handful of numbers: monthly recurring revenue, how much of it you keep, and how fast it grows. This guide explains MRR, ARR, churn, and net revenue retention, how they connect through the MRR bridge, and which ones investors look at first.
The MRR bridge
Ending MRR = starting MRR + new MRR + expansion MRR − contraction MRR − churned MRR. Tracking each piece separately shows where growth comes from: a company adding lots of new customers while losing many others can look healthy on total MRR and still have a leaky business.
In the calculator's example, $50,000 of starting MRR gains $6,000 from new customers and $3,000 from upgrades, and loses $500 to downgrades and $1,500 to cancellations. Ending MRR is $57,000 (14% growth, $684,000 ARR), and net revenue retention is 102%.
How monthly retention compounds over a year
| Monthly NRR | Equivalent annual NRR |
|---|---|
| 95% | 54.0% |
| 98% | 78.5% |
| 100% | 100.0% |
| 102% | 126.8% |
| 103% | 142.6% |
Using the metrics
Separate customer and revenue churn
Losing many small customers and losing one large one look very different. Track both.
Watch expansion revenue
Upgrades and seat growth are the cheapest revenue you can earn and the main driver of NRR above 100%.
Exclude one-time revenue
Setup fees, services, and usage overages that don't recur shouldn't be counted in MRR.
Frequently asked questions
What is the difference between MRR and ARR?
MRR (monthly recurring revenue) is the subscription revenue you can expect every month, excluding one-time fees. ARR (annual recurring revenue) is MRR × 12. Companies with mostly annual contracts tend to report ARR; those with monthly plans tend to report MRR.
What is net revenue retention (NRR)?
NRR measures how much revenue you keep from existing customers after upgrades, downgrades, and cancellations, ignoring new customers. NRR = (starting MRR + expansion − contraction − churn) ÷ starting MRR. Above 100% means existing customers alone grow your revenue.
What is a good churn rate for SaaS?
It depends on who you sell to. Products for small businesses often see 3%–7% monthly customer churn, while enterprise products commonly aim for under 1% monthly. Gross revenue churn below 1%–2% a month is generally considered healthy for B2B.
Why is the annualized NRR different from 12 × the monthly change?
Retention compounds. A 102% monthly NRR doesn't add 24% a year; it multiplies: 1.02^12 = 126.8%. Likewise, 98% a month compounds down to about 78.5% a year. Most companies report NRR on an annual cohort, which you can measure directly once you have a year of data.