How to Track MRR, Churn & LTV for Your SaaS

Why Revenue Metrics Matter

Traffic is vanity, revenue is sanity. You can have ten thousand visitors a day, but if none of them are converting into paying customers — or worse, if the customers you do have are quietly leaving — your business is in trouble. For SaaS companies, revenue metrics are the vital signs that tell you whether your business is healthy, growing, or slowly bleeding out.

Understanding metrics like MRR, churn, and LTV is not just an exercise for finance teams or investors. These numbers directly inform your decisions about pricing, retention strategies, feature development, and where to spend your marketing budget. They answer the questions that actually matter: Are we growing? Are we keeping customers? Is each customer worth more than it costs to acquire them?

If you are running a SaaS business and you are not tracking these metrics, you are flying blind. Let's fix that.

MRR (Monthly Recurring Revenue)

MRR is the heartbeat of any SaaS business. It represents the total predictable revenue your business generates every month from active subscriptions. If you have 100 customers each paying $50/month, your MRR is $5,000. Simple enough on the surface, but the real insight comes from breaking MRR into its components.

MRR is made up of four parts:

• New MRR — Revenue from brand-new customers who subscribed this month.
• Expansion MRR — Additional revenue from existing customers who upgraded their plan or added seats.
• Contraction MRR — Lost revenue from existing customers who downgraded.
• Churned MRR — Revenue lost from customers who cancelled entirely.

The formula that ties it all together is Net New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR. This single number tells you whether your business grew or shrank in a given month. Positive net new MRR means growth. Negative means you are losing ground.

Track each component individually. A healthy-looking net new MRR can hide problems — for example, you might be acquiring lots of new customers while silently losing just as many. Breaking MRR down exposes the full picture.

ARR (Annual Recurring Revenue)

ARR is simply MRR x 12. It projects your current monthly revenue over a full year, giving you an annualized view of your business. ARR does not predict the future — it is a snapshot that says "if nothing changed, here is where we would land."

When should you use ARR versus MRR? As a general rule, enterprise SaaS companies with annual contracts tend to think in ARR. Self-serve SaaS with monthly billing tends to think in MRR. There is no wrong answer — use whichever gives your team and your investors the clearest picture. Many founders report MRR internally for operational decisions and ARR externally when talking to investors, since ARR makes the numbers look more substantial and aligns with how investors benchmark SaaS companies.

Churn Rate

Churn is the silent killer of SaaS businesses. There are two types you need to track, and they tell you different things.

Customer Churn (Logo Churn)

This is the percentage of customers who cancel in a given period. The formula is Customer Churn Rate = (Customers Lost in Period / Customers at Start of Period) x 100. If you started the month with 200 customers and 10 cancelled, your monthly customer churn is 5%.

Revenue Churn (MRR Churn)

This measures the percentage of MRR you lost to cancellations and downgrades. The formula is Revenue Churn Rate = (Churned MRR + Contraction MRR) / MRR at Start of Period x 100. Revenue churn can tell a very different story than customer churn. If your biggest customers are the ones leaving, revenue churn will be much higher than customer churn — and that is a bigger problem.

What is a good churn rate? For SMB SaaS, under 5% monthly churn is a reasonable benchmark. Enterprise SaaS should aim for under 1% monthly. The best SaaS companies achieve net negative revenue churn, meaning expansion revenue from existing customers more than offsets losses from downgrades and cancellations.

The danger of churn is that it compounds. A 5% monthly churn rate does not mean you lose 60% of customers in a year — it means you lose about 46% (1 - 0.95^12 = 0.46). Even seemingly small churn rates eat away at your customer base faster than most founders expect. Reducing churn by even one or two percentage points can have a dramatic effect on long-term growth.

LTV (Lifetime Value)

LTV estimates how much total revenue you can expect from a single customer over the entire duration of their relationship with your business. The simplest formula is LTV = ARPU / Customer Churn Rate. If your average revenue per user is $50/month and your monthly churn rate is 5%, then LTV = $50 / 0.05 = $1,000.

LTV is most useful when compared to your Customer Acquisition Cost (CAC). The LTV:CAC ratio tells you whether your unit economics work. The widely accepted benchmark is to aim for a ratio of at least 3:1 — meaning each customer should generate at least three times what it cost to acquire them. A ratio below 1:1 means you are losing money on every customer. A ratio above 5:1 might mean you are under-investing in growth.

Keep in mind that LTV is an estimate, not a guarantee. It assumes your churn rate stays constant, which it rarely does. Use it as a directional guide, not a precise prediction.

ARPU (Average Revenue Per User)

ARPU is calculated as ARPU = MRR / Total Active Customers. It tells you how much revenue, on average, each customer contributes per month. On its own, ARPU is a useful sanity check. But it becomes truly valuable when you track it over time.

A rising ARPU means you are successfully moving upmarket — either through pricing increases, upsells, or attracting larger customers. A declining ARPU could mean you are adding lots of low-value customers, or that existing customers are downgrading. Neither is necessarily bad, but you need to know which direction you are moving and whether it is intentional.

Segment your ARPU by plan, by acquisition channel, and by cohort to get even deeper insights. You might discover that customers from organic search have twice the ARPU of customers from paid ads — information that should directly influence your marketing spend.

Trial-to-Paid Conversion

If your SaaS offers a free trial or freemium plan, your trial-to-paid conversion rate is one of the most important metrics in your funnel. It measures the percentage of trial users who become paying customers.

Industry benchmarks vary significantly based on your trial model:

• Opt-in free trial (no credit card required) — 15-25% conversion is considered good. You will get more trial signups but a lower conversion rate.
• Credit card required trial — 40-60% conversion is typical. Fewer people start the trial, but those who do are more serious.
• Freemium — 2-5% conversion to paid is common. The free tier acts as a long-term nurture funnel.

The key is to track not just the overall rate but also how it correlates with user behavior during the trial. Which features do converting users engage with? How quickly do they activate? These patterns help you optimize onboarding and improve conversion over time.

How to Track These Metrics

Knowing which metrics matter is one thing. Actually tracking them is another. Here are your options, roughly in order from worst to best:

Option 1: Manual Spreadsheets

You can pull data from Stripe, dump it into a spreadsheet, and calculate everything by hand. This works for about two weeks before you stop updating it. Manual tracking is error-prone, time-consuming, and does not scale. Avoid this unless you truly have no other option.

Option 2: Stripe Dashboard

Stripe provides basic MRR and churn data out of the box. It is a good starting point, but limited. You will not get cohort analysis, segmentation by acquisition source, or the ability to correlate revenue with traffic data. For early-stage companies just getting started, this is a reasonable temporary solution.

Option 3: Dedicated SaaS Metrics Tools

Tools like Baremetrics, ProfitWell, and ChartMogul connect to your payment provider and give you a full dashboard of SaaS metrics — MRR, churn, LTV, ARPU, and more. These are purpose-built and do their job well. The downside is that they only see your revenue data. They have no idea where your customers came from or what they did on your site before signing up.

Option 4: Abner

Abner takes a different approach by combining SaaS revenue metrics with privacy-first web analytics in one platform. Instead of switching between your analytics tool and your revenue tool and trying to manually connect the dots, you get the full picture in a single dashboard. See your MRR, churn, and LTV right alongside your traffic sources, page views, and conversion funnels.

Connecting Traffic to Revenue

Here is the thing most analytics setups get wrong: they treat traffic data and revenue data as separate worlds. Your web analytics tool tells you where visitors come from. Your SaaS metrics tool tells you how much revenue you are making. But neither tells you which traffic sources are actually driving paying customers.

This gap matters more than most founders realize. You might be pouring money into a paid channel that drives lots of signups but very few conversions to paid. Meanwhile, a blog post or integration directory listing might be quietly sending you your highest-LTV customers. Without connecting the two data sets, you will never know.

When your web analytics and SaaS metrics live together, you can answer questions like: Which traffic sources produce the highest-LTV customers? Which landing pages lead to the most trial-to-paid conversions? Is our organic traffic generating more revenue per visitor than paid? These are the questions that change how you allocate your time and budget.

This is exactly why we built Abner to do both. Instead of stitching together data from three or four different tools, you get a single source of truth — from the first page view to the monthly subscription payment. Privacy-first, lightweight, and built specifically for SaaS founders who want to understand not just their traffic, but their revenue.

Ready to see your traffic and revenue metrics in one place? Start your free 14-day trial of Abner and start tracking the metrics that actually matter for your SaaS.