31 types of Startup Metrics which matters to all Entrepreneurs


  • Monthly recurring revenue (MRR) is income that a business can count on receiving every single month. In short Monthly total of paid customer fees.
  • Annual Recurring Revenue (ARR) is a measure of the predicable and recurring revenue components of recurring revenue stream such as subscriptions or maintenance. Annual Recurring Revenue always excludes one-time fees and for most organizations, would exclude variable, usage, and consumption fees. In short Recurring revenue on an annual basis.
  • Average Revenue per Account (sometimes known as Average Revenue per User or per Unit), usually abbreviated to ARPA, is a measure of the revenue generated per account, typically per year or month. To calculate the ARPA a standard time period must be defined. The total revenue generated by all customers (paying subscribers) during that period should be divided by the number total number of customers.
ARPA = Monthly recurring revenue (MRR)/Total # of Customers
  • Gross Profit is a company's total revenue (equivalent to total sales) minus the cost of good sold.
  • Total Contract Value (TCV) is a metric that represents the value of one-time and recurring charges. It does not include usage charges. In short Value of one-time and recurring charges.
  • Annual contract Value (ACV) is value of a contract over a year.
  • Lifetime Value (LTV) is prediction of the net profit from the entire future relationship with a customer.
  • Deferred Revenue is not yet revenue. It is an amount that was received by a company in advance of earning it. The amount unearned (and therefore deferred) as of the date of the financial statements should be reported as a liability. The title of the liability account might be Unearned Revenues or Deferred Revenues.
  • Billings is (current quarter revenue + deferred revenue from previous quarter).
  • Customer Acquisition Cost (CAC) can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent. To calculate the ARPA-:
CAC = Revenue from largest customer / total revenue
  • Daily Active Users (DAU) are users other than one-time users per day.
  • Monthly active Users (MAU) is the number of distinct users who engage with a website or service in a given month.
  • Activation Rate is number of users taking a specific action to get value out of a product.
  • Month on month growth (MoM) is average of monthly growth rates.
  • Compounded Monthly Growth rate (CMGR) measures the return on an investment over a certain period of time. To calculate the CMGR -:
CMGR = (Latest Month/First Monthly)^ (1/ # of months) - 1
  • Monthly Churn rate is also known as the rate of attrition, is the percentage of subscribers to a service who discontinue their subscriptions to that service within a given time period. To calculate the Monthly Churn rate -:
Monthly Churn rate = Lost customers this month / prior month total
  • Cohort is a group of people who share a common characteristic over a certain period of time.
  • Retention by Cohort is % of original installed base (1st month) that are still transacting.
  • Net Churn is the amount of dollars lost after taking into consideration new, reactivated, or expansion revenue for the same time period or cohort. To calculate the Net Churn -:
Net Churn = (MRR lost - MRR from upsets) this month / MRR at the beginning of the month
  • Monthly cash Burn rate is quoted in terms of cash spent per month.
  • Net burn rate is the total amount of capital you lose each month.
  • Gross Burn is the total capital you spend monthly. Gross burn rate includes all your outgoing money. To calculate Gross Burn-:
Gross Burn = Monthly Expenses + any other cash outlays
  • Total addressable market (TAM), also called total available market, is a term that is typically used to reference the revenue opportunity available for a product or service. TAM helps to prioritize business opportunities by serving as a quick metric of the underlying potential of a given opportunity. In short revenue opportunity available for a product
  • Annual Run Rate is the yearly version of MRR or Monthly Recurring RevenueARR helps project future revenue for the year, based on your current monthly revenue. It assumes nothing changes in the year ahead - no churn, no new customers and no expansion. 
  • Gross Margin is the difference between revenue and cost of goods sold.
  • Sell-Through Rate is number of units sold in a period / number of items at the beginning of the period.
  • Network Effects is the effect of one user on the value of that product to other people (ex. Metcaffe’s Law). Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).
  • Viral Coefficient is a quantitative measure of Virality. Often calculated as the average number of invitations sent by each existing user times the conversion rate of invitation to new user. The viral coefficient is referred to as the K value.
  • Net Promoter Score is how likely user is to recommend your product to a friend.
  • Direct Traffic is traffic that comes directly and not through an intermediary 
  • Organic Traffic is unpaid traffic from search results.

Categories: Digital

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