Measure What Moves the Needle
Most early-stage SaaS founders track too many vanity metrics (page views, sign-ups) and not enough of the metrics that predict business health. Here's the focused set that tells you everything about your AI SaaS product's trajectory.
Revenue Metrics
- MRR (Monthly Recurring Revenue): Total committed monthly subscription revenue. Track: new MRR, expansion MRR, churned MRR, net new MRR.
- ARR (Annual Recurring Revenue): MRR × 12. Your headline number for investors.
- ARPU (Average Revenue Per User): MRR / active customers. Rising ARPU = successful upsell motion.
- AI Cost as % of Revenue: Critical for AI SaaS. Should be under 20% for healthy gross margins. Alert when it exceeds 30%.
Retention Metrics
- Churn Rate: Customers lost / customers at start of period. Aim for monthly churn under 2% (good), under 1% (great).
- Net Revenue Retention: Revenue from existing customers including expansions/contractions. Over 100% means expansion exceeds churn — you're growing without new customers.
- Cohort Retention: Retention by signup month. Shows whether product improvements are retaining new cohorts better than old ones.
Engagement Metrics
- DAU/MAU Ratio: Daily active / monthly active. Over 20% is good, over 40% is excellent. AI features are natural engagement drivers if they deliver recurring value.
- Activation Rate: % of signups who complete the core "aha moment" action. Under 30% signals onboarding problems.
- AI Feature Adoption: % of active users using AI features. Rising = product direction validated.
The 5-Metric Dashboard
If you can only track 5 things: MRR growth rate, monthly churn rate, activation rate, AI cost margin, and NPS. These five numbers tell you whether your business is healthy, growing, and profitable.