finance-metrics-quickref

Purpose

Quick reference for any SaaS finance metric without deep teaching. Use this when you need a fast formula lookup, benchmark check, or decision framework reminder. For detailed explanations, calculations, and examples, see the related deep-dive skills.

This is not a teaching tool—it's a cheat sheet optimized for speed. Scan, find, apply.

Key Concepts

Metric Categories

Metrics are organized into four families:

1. Revenue & Growth — Top-line money (revenue, ARPU, ARPA, MRR/ARR, churn, NRR, expansion)
2. Unit Economics — Customer-level profitability (CAC, LTV, payback, margins)
3. Capital Efficiency — Cash management (burn rate, runway, OpEx, net income)
4. Efficiency Ratios — Growth vs. profitability balance (Rule of 40, magic number)

When to Use This Skill

Use this when:

• You need a quick formula or benchmark
• You're preparing for a board meeting or investor call
• You're evaluating a decision and need to check which metrics matter
• You want to identify red flags quickly

Don't use this when:

• You need a full diagnostic workbook calculated from uploaded data (use gtm-metrics-analyzer)
• You're learning these metrics for the first time (start with deep-dive skills)
• You need examples and common pitfalls (covered in related skills)

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Application

All Metrics Reference Table

Metric	Formula	What It Measures	Good Benchmark	Red Flag
Revenue	Total sales before expenses	Top-line money earned	Growth rate >20% YoY (varies by stage)	Revenue growing slower than costs
ARPU	Total Revenue / Total Users	Revenue per individual user	Varies by model; track trend	ARPU declining cohort-over-cohort
ARPA	MRR / Active Accounts	Revenue per customer account	SMB: $100-$1K; Mid: $1K-$10K; Ent: $10K+	High ARPA + low ARPU (undermonetized seats)
ACV	Annual Recurring Revenue per Contract	Annualized contract value	SMB: $5K-$25K; Mid: $25K-$100K; Ent: $100K+	ACV declining (moving downmarket unintentionally)
MRR/ARR	MRR × 12 = ARR	Predictable recurring revenue	Growth + quality matter; track components	New MRR declining while churn stable/growing
Churn Rate	Customers Lost / Starting Customers	% of customers who cancel	Monthly <2% great, <5% ok; Annual <10% great	Churn increasing cohort-over-cohort
NRR	(Start ARR + Expansion - Churn - Contraction) / Start ARR × 100	Revenue retention + expansion	>120% excellent; 100-120% good; 90-100% ok	NRR <100% (base is contracting)
Expansion Revenue	Upsells + Cross-sells + Usage Growth	Additional revenue from existing customers	20-30% of total revenue	Expansion <10% of MRR
Quick Ratio	(New MRR + Expansion MRR) / (Churned MRR + Contraction)	Revenue gains vs. losses	>4 excellent; 2-4 healthy; <2 leaky bucket	Quick Ratio <2 (leaky bucket)
Gross Margin	(Revenue - COGS) / Revenue × 100	% of revenue after direct costs	SaaS: 70-85% good; <60% concerning	Gross margin <60% or declining
CAC	Total S&M Spend / New Customers	Cost to acquire one customer	Varies: Ent $10K+ ok; SMB <$500	CAC increasing while LTV flat
LTV	ARPU × Gross Margin % / Churn Rate	Total revenue from one customer	Must be 3x+ CAC; varies by segment	LTV declining cohort-over-cohort
LTV:CAC	LTV / CAC	Unit economics efficiency	3:1 healthy; <1:1 unsustainable; >5:1 underinvesting	LTV:CAC <1.5:1
Payback Period	CAC / (Monthly ARPU × Gross Margin %)	Months to recover CAC	<12 months great; 12-18 ok; >24 concerning	Payback >24 months (cash trap)
Contribution Margin	(Revenue - All Variable Costs) / Revenue × 100	True contribution after variable costs	60-80% good for SaaS; <40% concerning	Contribution margin <40%
Burn Rate	Monthly Cash Spent - Revenue	Cash consumed per month	Net burn <$200K manageable early; <$500K growth	Net burn accelerating
Runway	Cash Balance / Monthly Net Burn	Months until money runs out	12+ months good; 6-12 ok; <6 crisis	Runway <6 months
OpEx	S&M + R&D + G&A	Costs to run the business	Should grow slower than revenue	OpEx growing faster than revenue
Net Income	Revenue - All Expenses	Actual profit/loss	Early negative ok; mature 10-20%+ margin	Losses accelerating without growth
Rule of 40	Revenue Growth % + Profit Margin %	Balance of growth vs. efficiency	>40 healthy; 25-40 ok; <25 concerning	Rule of 40 <25
Magic Number	(Q Revenue - Prev Q Revenue) × 4 / Prev Q S&M	S&M efficiency	>0.75 efficient; 0.5-0.75 ok; <0.5 fix GTM	Magic Number <0.5
Operating Leverage	Revenue Growth vs. OpEx Growth	Scaling efficiency	Revenue growth > OpEx growth	OpEx growing faster than revenue
Gross vs. Net Revenue	Net = Gross - Discounts - Refunds - Credits	What you actually keep	Refunds <10%; discounts <20%	Refunds >10% (product problem)
Revenue Concentration	Top N Customers / Total Revenue	Dependency on largest customers	Top customer <10%; Top 10 <40%	Top customer >25% (existential risk)
Revenue Mix	Product/Segment Revenue / Total Revenue	Portfolio composition	No single product >60% ideal	Single product >80% (no diversification)
Cohort Analysis	Group customers by join date; track behavior	Whether business improving or degrading	Recent cohorts same/better than old	Newer cohorts perform worse
CAC Payback by Channel	CAC / Monthly Contribution (by channel)	Payback by acquisition channel	Compare across channels	One channel far worse than others
Gross Margin Payback	CAC / (Monthly ARPU × Gross Margin %)	Payback using actual profit	Typically 1.5-2x simple payback	Payback using margin >36 months
Unit Economics	Revenue per unit - Cost per unit	Profitability of each "unit"	Positive contribution required	Negative contribution margin
Segment Payback	CAC / Monthly Contribution (by segment)	Payback by customer segment	Compare to allocate resources	One segment unprofitable
Incrementality	Revenue caused by action - Baseline	True impact of marketing/promo	Measure with holdout tests	Celebrating revenue that would've happened anyway
Working Capital	Cash timing between revenue and collection	Cash vs. revenue timing	Annual upfront > monthly billing	Long payment terms killing runway

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Quick Decision Frameworks

Use these frameworks to combine metrics for common PM decisions.

Framework 1: Should We Build This Feature?

Ask:

1. Revenue impact? Direct (pricing, add-on) or indirect (retention, conversion)?
2. Margin impact? What's the COGS? Does it dilute margins?
3. ROI? Revenue impact / Development cost

Build if:

• ROI >3x in year one (direct monetization), OR
• LTV impact >10x development cost (retention), OR
• Strategic value overrides short-term ROI

Don't build if:

• Negative contribution margin even with optimistic adoption
• Payback period exceeds average customer lifetime

Metrics to check: Revenue, Gross Margin, LTV, Contribution Margin

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Framework 2: Should We Scale This Acquisition Channel?

Ask:

1. Unit economics? CAC, LTV, LTV:CAC ratio
2. Cash efficiency? Payback period
3. Customer quality? Cohort retention, NRR by channel
4. Scalability? Magic Number, addressable volume

Scale if:

• LTV:CAC >3:1 AND
• Payback <18 months AND
• Customer quality meets/beats other channels AND
• Magic Number >0.75

Don't scale if:

• LTV:CAC <1.5:1 AND
• No clear path to improvement

Metrics to check: CAC, LTV, LTV:CAC, Payback Period, NRR, Magic Number

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Framework 3: Should We Change Pricing?

Ask:

1. ARPU/ARPA impact? Will revenue per customer increase?
2. Conversion impact? Help or hurt trial-to-paid conversion?
3. Churn impact? Create churn risk or reduce it?
4. NRR impact? Enable expansion or create contraction?

Implement if:

• Net revenue impact positive after churn risk
• Can test with segment before broad rollout

Don't change if:

• High churn risk without offsetting expansion
• Can't test hypothesis before committing

Metrics to check: ARPU, ARPA, Churn Rate, NRR, CAC Payback

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Framework 4: Is the Business Healthy?

Check by stage:

Early Stage (Pre-$10M ARR):

• Growth Rate >50% YoY
• LTV:CAC >3:1
• Gross Margin >70%
• Runway >12 months

Growth Stage ($10M-$50M ARR):

• Growth Rate >40% YoY
• NRR >100%
• Rule of 40 >40
• Magic Number >0.75

Scale Stage ($50M+ ARR):

• Growth Rate >25% YoY
• NRR >110%
• Rule of 40 >40
• Profit Margin >10%

Metrics to check: Revenue Growth, NRR, LTV:CAC, Rule of 40, Magic Number, Gross Margin

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Red Flags by Category

Revenue & Growth Red Flags

Red Flag	What It Means	Action
Churn increasing cohort-over-cohort	Product-market fit degrading	Stop scaling acquisition; fix retention first
NRR <100%	Base is contracting	Fix expansion or reduce churn before scaling
Revenue churn > logo churn	Losing big customers	Investigate why high-value customers leave
Quick Ratio <2	Leaky bucket (barely outpacing losses)	Fix retention before scaling acquisition
Expansion revenue <10% of MRR	No upsell/cross-sell engine	Build expansion paths
Revenue concentration >50% in top 10 customers	Existential dependency risk	Diversify customer base

Unit Economics Red Flags

Red Flag	What It Means	Action
LTV:CAC <1.5:1	Buying revenue at a loss	Reduce CAC or increase LTV before scaling
Payback >24 months	Cash trap (long cash recovery)	Negotiate annual upfront or reduce CAC
Gross margin <60%	Low profitability per dollar	Increase prices or reduce COGS
CAC increasing while LTV flat	Unit economics degrading	Optimize conversion or reduce sales cycle
Contribution margin <40%	Unprofitable after variable costs	Cut variable costs or increase prices

Capital Efficiency Red Flags

Red Flag	What It Means	Action
Runway <6 months	Survival crisis	Raise capital immediately or cut burn
Net burn accelerating without revenue growth	Burning faster without results	Cut costs or increase revenue urgency
OpEx growing faster than revenue	Negative operating leverage	Freeze hiring; optimize spend
Rule of 40 <25	Burning cash without growth	Improve growth or cut to profitability
Magic Number <0.5	S&M engine broken	Fix GTM efficiency before scaling spend

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When to Use Which Metric

Prioritizing features:

• Revenue impact → Revenue, ARPU, Expansion Revenue
• Margin impact → Gross Margin, Contribution Margin
• ROI → LTV impact, Development cost

Evaluating channels:

• Acquisition cost → CAC, CAC by Channel
• Customer value → LTV, NRR by Channel
• Payback → Payback Period, CAC Payback by Channel
• Scalability → Magic Number

Pricing decisions:

• Monetization → ARPU, ARPA, ACV
• Impact → Churn Rate, NRR, Expansion Revenue
• Efficiency → CAC Payback (will pricing change affect it?)

Business health:

• Growth → Revenue Growth, MRR/ARR Growth
• Retention → Churn Rate, NRR, Quick Ratio
• Economics → LTV:CAC, Payback Period, Gross Margin
• Efficiency → Rule of 40, Magic Number, Operating Leverage
• Survival → Burn Rate, Runway

Board/investor reporting:

• Key metrics: ARR, Revenue Growth %, NRR, LTV:CAC, Rule of 40, Magic Number, Burn Rate, Runway
• Stage-specific: Early stage emphasize growth + unit economics; Growth stage emphasize Rule of 40 + Magic Number; Scale stage emphasize profitability + efficiency

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Examples

Example 1: Feature Investment Sanity Check

You are deciding whether to build a premium export feature.

1. Use Framework 1 (Should We Build This Feature?)
2. Pull baseline metrics: ARPU, Gross Margin, LTV, Contribution Margin
3. Model optimistic, base, and downside adoption
4. Reject if contribution margin turns negative in downside case

Quick output:

• Base case ROI: 3.8x
• Contribution margin impact: +4 points
• Decision: Build now, with a 90-day post-launch check on churn and expansion

Example 2: Channel Scale Decision

Paid social is generating many signups but weak retention.

1. Use Framework 2 (Should We Scale This Acquisition Channel?)
2. Check CAC, LTV:CAC, Payback Period, and NRR by channel
3. Compare against best-performing channel, not company average

Quick output:

• LTV:CAC: 1.6:1
• Payback: 26 months
• NRR: 88%
• Decision: Do not scale; cap spend and run targeted optimization tests

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Common Pitfalls

• Using blended company averages instead of cohort or channel-level metrics
• Scaling acquisition when Quick Ratio is weak and retention is deteriorating
• Treating high LTV:CAC as sufficient without checking payback and runway impact
• Raising prices based on ARPU lift alone without modeling churn and contraction
• Comparing benchmarks across mismatched company stages or business models
• Tracking many metrics without a clear decision question

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References

Related Skills (Deep Dives)

• gtm-metrics-analyzer — Full GTM diagnostic workbook calculated from uploaded source data (48 metrics, 4-tab Excel output)
• feature-investment-advisor — Uses these metrics to evaluate feature ROI
• acquisition-channel-advisor — Uses these metrics to evaluate channel viability
• finance-based-pricing-advisor — Uses these metrics to evaluate pricing changes
• business-health-diagnostic — Uses these metrics to diagnose business health

External Resources

• Bessemer Venture Partners: "SaaS Metrics 2.0" — Comprehensive SaaS benchmarking
• David Skok (Matrix Partners): "SaaS Metrics" blog series — Deep dive on unit economics
• Tomasz Tunguz (Redpoint): SaaS benchmarking research and blog
• ChartMogul, Baremetrics, ProfitWell: SaaS analytics platforms with metric definitions
• SaaStr: Annual SaaS benchmarking surveys

Provenance

• Adapted from research/finance/Finance_QuickRef.md
• Formulas from research/finance/Finance for Product Managers.md
• Decision frameworks from research/finance/Finance_For_PMs.Putting_It_Together_Synthesis.md