Key SaaS metrics explained
SaaS businesses are valued on a multiple of ARR — typically 5–15× ARR for growth-stage companies depending on growth rate, NRR, and profitability. Understanding these metrics helps you set targets and communicate progress to investors.
Net Revenue Retention (NRR) is the single most important SaaS health metric. NRR = (Beginning MRR + Expansion − Contraction − Churn) ÷ Beginning MRR. Benchmark: Slack, Zoom, and Twilio all achieved NRR above 130% at peak growth — meaning their existing customers were growing revenue faster than the company needed to replace churned revenue.
For workforce cost modeling as you scale, use the Employer Tax Calculator to understand the true per-employee cost including taxes and benefits.