The headline SaaS metrics
| Metric | What it measures | Healthy range |
|---|---|---|
| ARR (Annual Recurring Revenue) | Annualised value of contracted subscriptions | Growing, not one-off bumps |
| NRR (Net Revenue Retention) | Cohort revenue today / cohort revenue 12 mo ago, including upsell minus churn | 110%+ excellent, 100%+ healthy |
| GRR (Gross Revenue Retention) | Same as NRR but excluding upsell - just the lost revenue | 90%+ healthy, 95%+ excellent |
| Gross margin | Revenue minus COGS / Revenue | 70-85% for SaaS |
| CAC payback | Months for new customer revenue to repay acquisition cost | Under 18 months |
| Magic Number | Net new ARR / Sales & Marketing spend | Above 1.0 means efficient |
| Burn multiple | Cash burn / net new ARR | Under 1.5x at growth stage |
How investors actually calculate these
- ARR includes only contracted subscription revenue. Excludes one-time setup fees, professional services, expected-but-unsigned deals.
- NRR is calculated by cohort: take customers from 12 months ago, sum their revenue today (including upsell, minus churn), divide by their revenue 12 months ago.
- Gross margin uses fully-loaded COGS: hosting, third-party software passed through, customer support, customer success teams allocated to the cohort.
- CAC payback uses gross margin, not revenue: new customer monthly revenue × gross margin / monthly CAC = payback months.
Many founder-built models calculate metrics one way; investor diligence calculates them differently and the founder gets surprised. A fractional CFO calculates them the way investors will, before the pitch.
What good SaaS finance reporting looks like
- Monthly board pack with the metrics above plus narrative commentary
- ARR bridge (start-of-period ARR + new + upsell - churn = end-of-period ARR)
- Cohort retention chart (visual NRR/GRR by quarterly cohort)
- Pipeline coverage (next-quarter pipeline vs target, weighted by stage)
- Hiring plan with cost per hire fully loaded
- 13-week cash forecast updated weekly
- Scenario modeling: base, bull, bear, with explicit assumption diffs
Tools fractional CFOs actually use
- Modeling: Pry, Causal, Mosaic, or Excel/Google Sheets if the team doesn't have specialised tools
- Bookkeeping: Xero, QuickBooks Online (NetSuite at scale)
- Subscription management: Stripe Billing, Chargebee, Recurly
- Reporting: Looker Studio, Metabase, ChartMogul, Baremetrics
- R&D claim: GrantTree, EmpowerRD, or specialist accountancy firms
FAQ
Frequently asked questions
What if our metrics are weak?+
Get them right first, then decide whether to raise. Raising on weak metrics either fails or accepts a low valuation. A fractional CFO can tell you within 2-3 weeks whether you're in raisable shape and what to fix if not.
Should I include MRR or ARR in board materials?+
ARR is the standard for B2B SaaS. MRR is more common in consumer SaaS or when your contracts are predominantly month-to-month. Whichever you use, be consistent and define it clearly.
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