/startup-metrics-framework

name: startup-metrics-framework
description: Track, calculate, and optimize key performance metrics for SaaS, marketplace, consumer, and B2B startups from seed through Series A, including unit economics, growth efficiency, and cash management. Use this skill when defining a metrics framework, calculating CAC/LTV/burn multiple, benchmarking business health, or preparing metrics dashboards for investors or board reporting.
version: 1.0.0

Startup Metrics Framework

Comprehensive guide to tracking, calculating, and optimizing key performance metrics for different startup business models from seed through Series A.

Overview

Track the right metrics at the right stage. Focus on unit economics, growth efficiency, and cash management metrics that matter for fundraising and operational excellence.

Universal Startup Metrics

Revenue Metrics

**MRR (Monthly Recurring Revenue)**

MRR = Σ (Active Subscriptions × Monthly Price)

**ARR (Annual Recurring Revenue)**

ARR = MRR × 12

**Growth Rate**

MoM Growth = (This Month MRR - Last Month MRR) / Last Month MRR
YoY Growth = (This Year ARR - Last Year ARR) / Last Year ARR

**Target Benchmarks:**

• Seed stage: 15-20% MoM growth
• Series A: 10-15% MoM growth, 3-5x YoY
• Series B+: 100%+ YoY (Rule of 40)

Unit Economics

**CAC (Customer Acquisition Cost)**

CAC = Total S&M Spend / New Customers Acquired

Include: Sales salaries, marketing spend, tools, overhead

**LTV (Lifetime Value)**

LTV = ARPU × Gross Margin% × (1 / Churn Rate)

Simplified:

LTV = ARPU × Average Customer Lifetime × Gross Margin%

**LTV:CAC Ratio**

LTV:CAC = LTV / CAC

**Benchmarks:**

• LTV:CAC > 3.0 = Healthy
• LTV:CAC 1.0-3.0 = Needs improvement
• LTV:CAC < 1.0 = Unsustainable

**CAC Payback Period**

CAC Payback = CAC / (ARPU × Gross Margin%)

**Benchmarks:**

• < 12 months = Excellent
• 12-18 months = Good
• > 24 months = Concerning

Cash Efficiency Metrics

**Burn Rate**

Monthly Burn = Monthly Revenue - Monthly Expenses

Negative burn = losing money (typical early-stage)

**Runway**

Runway (months) = Cash Balance / Monthly Burn Rate

**Target:** Always maintain 12-18 months runway

**Burn Multiple**

Burn Multiple = Net Burn / Net New ARR

**Benchmarks:**

• < 1.0 = Exceptional efficiency
• 1.0-1.5 = Good
• 1.5-2.0 = Acceptable
• > 2.0 = Inefficient

Lower is better (spending less to generate ARR)

SaaS Metrics

Revenue Composition

**New MRR** New customers × ARPU

**Expansion MRR** Upsells and cross-sells from existing customers

**Contraction MRR** Downgrades from existing customers

**Churned MRR** Lost customers

**Net New MRR Formula:**

Net New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR

Retention Metrics

**Logo Retention**

Logo Retention = (Customers End - New Customers) / Customers Start

**Dollar Retention (NDR - Net Dollar Retention)**

NDR = (ARR Start + Expansion - Contraction - Churn) / ARR Start

**Benchmarks:**

• NDR > 120% = Best-in-class
• NDR 100-120% = Good
• NDR < 100% = Needs work

**Gross Retention**

Gross Retention = (ARR Start - Churn - Contraction) / ARR Start

**Benchmarks:**

• > 90% = Excellent
• 85-90% = Good
• < 85% = Concerning

SaaS-Specific Metrics

**Magic Number**

Magic Number = Net New ARR (quarter) / S&M Spend (prior quarter)

**Benchmarks:**

• > 0.75 = Efficient, ready to scale
• 0.5-0.75 = Moderate efficiency
• < 0.5 = Inefficient, don't scale yet

**Rule of 40**

Rule of 40 = Revenue Growth Rate% + Profit Margin%

**Benchmarks:**

• > 40% = Excellent
• 20-40% = Acceptable
• < 20% = Needs improvement

**Example:** 50% growth + (10%) margin = 40% ✓

**Quick Ratio**

Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)

**Benchmarks:**

• > 4.0 = Healthy growth
• 2.0-4.0 = Moderate
• < 2.0 = Churn problem

Marketplace Metrics

GMV (Gross Merchandise Value)

**Total Transaction Volume:**

GMV = Σ (Transaction Value)

**Growth Rate:**

GMV Growth Rate = (Current Period GMV - Prior Period GMV) / Prior Period GMV

**Target:** 20%+ MoM early-stage

Take Rate

Take Rate = Net Revenue / GMV

**Typical Ranges:**

• Payment processors: 2-3%
• E-commerce marketplaces: 10-20%
• Service marketplaces: 15-25%
• High-value B2B: 5-15%

Marketplace Liquidity

**Time to Transaction** How long from listing to sale/match?

**Fill Rate** % of requests that result in transaction

**Repeat Rate** % of users who transact multiple times

**Benchmarks:**

• Fill rate > 80% = Strong liquidity
• Repeat rate > 60% = Strong retention

Marketplace Balance

**Supply/Demand Ratio:** Track relative growth of supply and demand sides.

**Warning Signs:**

• Too much supply: Low fill rates, frustrated suppliers
• Too much demand: Long wait times, frustrated customers

**Goal:** Balanced growth (1:1 ratio ideal, but varies by model)

Consumer/Mobile Metrics

Engagement Metrics

**DAU (Daily Active Users)** Unique users active each day

**MAU (Monthly Active Users)** Unique users active each month

**DAU/MAU Ratio**

DAU/MAU = DAU / MAU

**Benchmarks:**

• > 50% = Exceptional (daily habit)
• 20-50% = Good
• < 20% = Weak engagement

**Session Frequency** Average sessions per user per day/week

**Session Duration** Average time spent per session

Retention Curves

**Day 1 Retention:** % users who return next day **Day 7 Retention:** % users active 7 days after signup **Day 30 Retention:** % users active 30 days after signup

**Benchmarks (Day 30):**

• > 40% = Excellent
• 25-40% = Good
• < 25% = Weak

**Retention Curve Shape:**

• Flattening curve = good (users becoming habitual)
• Steep decline = poor product-market fit

Viral Coefficient (K-Factor)

K-Factor = Invites per User × Invite Conversion Rate

**Example:** 10 invites/user × 20% conversion = 2.0 K-factor

**Benchmar