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SaaS Metrics Calculator
Calculates the four metrics a SaaS board pack is judged on, and states the definition used for each — because most disagreements about these numbers are definitional, not arithmetic.
How this calculation works
- Rule of 40 adds the revenue growth rate to the profitability margin. Which margin — EBITDA, operating, or free cash flow — is a choice, and the tool reports which one it used.
- CAC payback is customer acquisition cost divided by the gross-margin-adjusted revenue that customer generates per month, giving the months required to recover the cost of winning them.
- LTV:CAC divides customer lifetime value by acquisition cost. Lifetime value is gross-margin-adjusted revenue per period divided by the churn rate, which is the assumption doing most of the work.
- Net revenue retention compares this period's revenue from last period's cohort — including expansion, contraction, and churn, but excluding new logos — against that cohort's starting revenue.
Conventions and edge cases
- CAC payback and LTV must both be gross-margin-adjusted. Using raw revenue overstates both, often by 20 to 30 points of margin, and is the most common way these metrics get inflated.
- LTV derived from a churn rate assumes churn is constant over the customer's life. It rarely is: early-life churn typically runs well above steady state, which makes the resulting LTV optimistic.
- Net revenue retention must exclude new customers. Including them measures growth, not retention, and produces a number that can exceed 100% while the existing base is shrinking.
Frequently asked questions
- Which margin should Rule of 40 use?
- There is no single answer, which is why the metric travels badly between companies. EBITDA margin is the most common in practice, free cash flow margin is the most conservative, and operating margin sits between them. What matters is stating which you used and applying it consistently across periods.
- Why adjust CAC payback for gross margin?
- Because you recover acquisition cost out of gross profit, not revenue. A customer paying $1,000 a month at 75% gross margin returns $750 a month toward CAC. Using the full $1,000 understates payback by a quarter and flatters every downstream comparison.
- Does net revenue retention include new customers?
- No. NRR measures what happened to a fixed cohort — expansion, contraction, and churn within customers who were already there. Adding new logos turns it into a growth measure and hides contraction in the existing base.
- Is an LTV:CAC of 3:1 actually the target?
- It is a widely repeated rule of thumb rather than a threshold with much evidence behind it. It is more useful as a direction of travel over time than as a pass mark, particularly since LTV depends heavily on a churn assumption that is difficult to pin down early.
Related tools
- Run-Rate & Annualization CalculatorAnnualize a partial period and project year-end from year-to-date actuals, with the assumption made explicit.
- Contribution Margin CalculatorPaste SKU-level price, variable cost, and volume for margin per unit, CM ratio, and total contribution by line.
- Cash Conversion Cycle CalculatorDSO, DIO, DPO, and the cash conversion cycle across as many periods as you paste in.