Top 5 SaaS Metrics for Bootstrappers

As a seasoned SaaS operator who has been in the trenches of multiple bootstrapped startups, I know firsthand how challenging it can be to navigate the metrics maze. We’re inundated with data from all sides – our product analytics, our marketing dashboards, our sales CRMs, our financial statements. It’s easy to get lost in the noise and lose sight of the signals that truly matter.

I’ve seen far too many bootstrapped founders fall into one of two traps: either they try to track everything and drown in data, or they fly blind and make decisions based on gut feel alone. Both are recipes for suboptimal growth at best, and failure at worst.

The key is to focus relentlessly on the few metrics that are true leading indicators of the health and growth potential of your business. The ones that help you make smarter, faster decisions about where to invest your limited time and resources.

In this article, I’ll share the metrics that I believe are most critical for bootstrapped SaaS companies, especially those in the crucial $3-20M ARR range. These are the numbers that I’ve relied on time and again to guide my own decision-making as an operator, advisor, and investor in the bootstrapped SaaS space.

Monthly Recurring Revenue (MRR): Your Growth Compass

Let’s start with the obvious one: Monthly Recurring Revenue, or MRR. As SaaS operators, we live and breathe MRR. It’s the lifeblood of our business model, the predictable revenue stream that we can count on month after month (assuming we’re doing our job right on the retention front, but more on that later).

Tracking your MRR growth is like checking your company’s vital signs. It tells you at a glance whether you’re gaining momentum, stalling out, or sliding backwards.

But MRR growth alone doesn’t give you the full picture. To really understand the underlying drivers of your growth (or lack thereof), you need to unpack MRR into its component parts:

• New MRR: MRR from new customers acquired in a given period
• Expansion MRR: Additional MRR from existing customers through upsells, cross-sells, seat expansions, etc.
• Churned MRR: MRR lost from cancellations and downgrades

Analyzing the interplay between these MRR components can yield powerful insights. For example, if you’re adding a healthy amount of new MRR each month but your overall MRR growth is anemic, that suggests you have a retention problem. Customers are churning out the back door as fast as you can bring them in the front.

On the flip side, if your new MRR growth is slowing but your overall MRR is still growing at a decent clip, that suggests you’re doing a great job at expanding revenue within your existing base. Negative net churn for the win!

Customer Acquisition Cost (CAC): The Price of Growth

Acquiring new customers is the jet fuel of SaaS growth. But as bootstrappers, we can’t just pour on the gas willy-nilly. Every dollar we invest in sales and marketing is a dollar that comes directly out of our (often meager) profits. We need to be ruthlessly efficient in our spend.

That’s where Customer Acquisition Cost (CAC) comes in. CAC measures how much you’re shelling out to acquire each new customer. It’s calculated by dividing your total sales and marketing spend in a period by the number of new customers added in that same period.

Here’s why CAC is so critical: it determines the viability and velocity of your growth. If your CAC is too high relative to the revenue you’re able to extract from each customer, you’ll burn through cash faster than a Tesla Roadster.

Ideally, you want to recoup your CAC in 12 months or less – meaning a new customer should generate enough gross profit in their first year to cover what you spent to acquire them. If your payback period is much longer than that, you may need to revisit your pricing, tighten up your sales cycle, or find more efficient acquisition channels.

Lifetime Value (LTV): Playing the Long Game

CAC tells you the cost of acquiring a new customer. But to really gauge the ROI of your acquisition spend, you need to understand how much revenue you can expect to generate from that customer over their lifetime with your company. Enter Lifetime Value (LTV).

Calculating LTV is part art, part science. It requires making a lot of assumptions about how long a customer will stick around (retention), how much they’ll spend over time (ARPU), and how much it will cost you to serve them (COGS).

As bootstrappers, we don’t always have the luxury of a long, stable history to draw from in making these assumptions. Especially in the early days, our retention curves can be all over the place as we work out the kinks in our product and onboarding.

That’s why, in the early stages, I recommend focusing on a simpler metric: Year 1 Profit per Customer. How much gross profit are you generating from a customer in the first year, and how does that compare to your CAC? If you’re underwater on profitability after 12 months, chances are you’ll have a tough time making it up in the out years.

As your business matures and your retention stabilizes, you can build more robust LTV models that account for multi-year revenue streams, expansion opportunities, and changes in COGS over time. You can also segment your LTV analysis by customer cohort, pricing tier, acquisition channel, and other dimensions to identify your most profitable customers.

But even with a simple Year 1 Profit metric, you can make smarter decisions about how much you can afford to spend to acquire different types of customers and still hit your profitability goals.

Gross and Net Revenue Retention: Plugging the Leaky Bucket

Acquiring new customers is hard work. Keeping them is even harder. And for bootstrappers, it’s absolutely essential. When you’re self-funding your growth, you can’t afford to have customers churning out the back door as fast as you can bring them in the front.

That’s why tracking and optimizing your retention metrics should be a top priority from day one. There are two key retention metrics I track religiously:

1. Gross Revenue Retention (GRR): The percentage of revenue from existing customers that you retain each period, not counting any upsells or expansion. If your monthly GRR is 90%, that means you’re losing 10% of your revenue to cancellations and downgrades each month. Ouch.
2. Net Revenue Retention (NRR): The percentage of revenue from existing customers that you retain each period, including any upsells or expansion. An NRR over 100% is the holy grail – it means your existing customers are actually increasing their spend with you over time, more than offsetting any losses from churn.

In the early days of your SaaS, focus on moving the needle on GRR. Talk to every single customer who churns. Figure out where your product is missing the mark, where your onboarding is falling short, where your support is lacking. Look for patterns in the types of customers who churn and when. Then ruthlessly prioritize the retention initiatives that will have the biggest impact.

As you scale, shift more of your focus to NRR. The most successful SaaS companies don’t just retain revenue, they grow it within their existing base. They expand usage within accounts. They upsell additional products and features. They turn users into champions and advocates. In SaaS Capital’s latest benchmarking data, top performing bootstrapped companies are achieving NRR of 120% or more. That’s the power of negative net churn.

Product Engagement: The Leading Indicator of Customer Health

GRR and NRR are the ultimate measures of customer retention. But they’re lagging indicators – they tell you what’s already happened. To get ahead of the retention curve, you need to track product engagement – the leading indicator of customer health and happiness.

The specific engagement metrics you track will depend on the nature of your product. But here are a few examples:

• Stickiness: How frequently are users logging in and engaging with your core product value? Daily Active Users (DAU) and Monthly Active Users (MAU) are common measures of stickiness.
• Feature Adoption: Of all the features in your product, which ones are most correlated with retention and expansion? Track the percentage of users who adopt these “sticky” features and how deeply they engage with them.
• Cohort Activity: How does engagement evolve as customer cohorts mature? Are older cohorts using your product more or less than they did in their first month, first year?

Here’s a real-life example: At one of my previous SaaS companies, we offered a project management tool. We discovered that customers who used our task commenting feature in their first week were 40% more likely to convert to a paid plan and 60% more likely to still be around a year later compared to those who didn’t. Lightbulb moment!

We made task commenting a key focus of our onboarding and saw an immediate uptick in conversions and retention. By moving the needle on that one leading indicator, we were able to dramatically improve the lagging indicators that mattered most to the business.

Bringing It All Together

We’ve covered a lot of ground here. MRR, CAC, LTV, GRR, NRR, product engagement – that’s a lot of acronyms and a lot of numbers to keep track of. But remember, the goal isn’t to drown in data, it’s to find the signal in the noise. The key is to focus on the metrics that are most relevant to your stage of growth and unique business context.

If you’re just starting out and trying to find product-market fit, double down on engagement metrics. Figure out what features are really moving the needle on customer value and double down on those.

If you’ve found some early traction and you’re trying to scale efficiently, focus on CAC and payback period. Keep a hawk eye on your sales and marketing spend and make sure you’re acquiring customers at a cost that makes sense for your business model.

As you mature and your revenue base grows, shift more of your focus to GRR and NRR. Invest in customer success, gather regular feedback, build out your product roadmap based on what you’re hearing from your best customers. Play the long game of maximizing customer lifetime value.

But through it all, never lose sight of the bigger picture. As bootstrappers, our ultimate goal is to build healthy, sustainable, profitable businesses. Vanity metrics like registered users or total downloads might feel good in the moment, but they won’t pay the bills or keep the lights on.

Focus relentlessly on the metrics that matter most to your bottom line. Use them to guide your toughest decisions about where to invest your limited time and resources. And above all, stay grounded in your mission and the value you’re creating for your customers. Because in the end, that’s what will drive your success – not just in the metrics, but in the meaningful impact you have on the world.

Happy measuring, my fellow bootstrappers. Keep fighting the good fight.