SAAS Metrices
Software-as-a-Service (SaaS) metrics are often used to track revenue performance because the SaaS business model depends on predictable, recurring income rather than one-time license sales. Revenue is generated and recognized over the lifecycle of a customer relationship, making it essential for organizations to monitor indicators that reflect growth, stability, and retention. SaaS metrics provide a structured way to measure how effectively a company acquires customers, monetizes subscriptions, and sustains revenue over time.
Core revenue-focused SaaS metrics include Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR), which represent the normalized, recurring income a business can expect on a monthly or annual basis. These metrics form the foundation for revenue forecasting and growth analysis. Annual Contract Value (ACV) complements MRR and ARR by capturing the average annual revenue per customer contract, helping teams understand deal sizes and sales performance.
| Annual Recurring Revenue | Annual Recurring Revenue (ARR) is the yearly value of recurring revenue from subscriptions. ARR excludes one‑time fees and is used to assess long‑term revenue scale and growth. |
| Monthly Recurring Revenue | Monthly Recurring Revenue (MRR) gives a short-term view of revenue. Helps track growth, churn, and expansion month over month. |
| Annual Contract Value | Annual Contract Value (ACV) measures the average annual value of a customer contract. Unlike ARR, it is customer-specific. ACV helps evaluate deal size and sales performance and may include recurring fees and any contractually committed charges over a year. |
| Net Revenue Retention (NRR) | Net Revenue Retention (NRR) represents the percentage of revenue retained including expansion gains. NRR indicates how effectively a company grows revenue within its current customer base. |
All the above metrices are calculated for asset line items.
Annual Recurring Revenue
Annual Recurring Revenue (ARR) is the yearly value of recurring revenue from subscriptions of standalone and bundle option products. ARR is calculated using the below formula:
ARR = Monthly Recurring Revenue (MRR) *12or
ARR = (Net Price/Total Selling Term) *12, where the frequency of the term is monthly.
The existing "Asset ARR" field is used of asset line items and the ARR is recalculated after any pricing or term change, supporting all charge types, ramp lines, and product types. ARR is not calculated for one-time lines, which display a value of zero.
Example 1: New selling term is 12 months, Net Price = 1200/- and hence ARR = (1200/12) *12 = 1200
Example 2: New selling term is 18 months, Net Price = 2000/- and hence ARR = (2000/18)*12 = 1333
Monthly Recurring Revenue
Monthly Recurring Revenue (MRR) gives a short-term view of revenue. Helps track growth, churn, and expansion month over month.
MRR = Annual Recurring Revenue/12MRR automatically updates when ARR is recalculated and excludes one-time lines, providing accurate monthly revenue metrics for finance, sales, and operations teams.
The amount is displayed as a field on the Asset line item. MRR is recalculated after each pricing change, supporting all recurring bundles, options, rollup lines, and ramp line items.
Annual Contract Value
Annual Contract Value (ACV) measures the average annual value of a customer contract. Unlike ARR, it is customer-specific. It is useful for sales teams to understand the value of deals. They can identify Average ACV on Quote level and on Account level.
ACV = Total Contract Value / Contract Duration (in years)The amount is displayed as a field on the Asset line item. The system recalculates ACV after each pricing change, supporting bundles, options, rollup lines, charge type, recurring, one-time, and ramp line items.
Example 1: If Total Contract Value (TCV) = $4500 and total Contract Duration =5 yrs then ACV=4500/5= $900
Example 2: Multi year ramp line: 3 year ramp asset with 10% annual uplift, base price=$100, frequency=monthly recurring.
- Year 1 ACV: $1,200
- Year 2 ACV: $1,320 (+10%)
- Year 3 ACV: $1,452 (+10%)
The ACV (Annual Contract Value) field is available on line items, summary groups, and quotes, displaying annual contract values. Enable the EnableSaasMetricsComputation feature setting to calculate ACV across line items, quotes, and summary groups.