SaaS Metrics School

By Ben MurrayBusiness Entrepreneurship Technology Management

SaaS Metrics School episodes

September 03, 2025Understanding the SaaS Magic Number — Benchmarks, Nuances & Investor Insights
The SaaS Magic Number is one of the most Googled SaaS metric posts — but it’s also one of the most misunderstood. In episode #310, Ben Murray explains what the SaaS Magic Number really measures, why investors care about it, and the benchmarks you should use to evaluate your own business model.
From the formula (revenue growth vs. sales & marketing spend) to the nuances (why churn and expansion impact the metric), Ben shows SaaS operators how to avoid common pitfalls. You’ll also hear the latest benchmark data from Ray Rike at Benchmarkit.ai, giving you investor-ready context for your next fundraising or valuation conversation.
What You’ll Learn:
What the SaaS Magic Number is and how to calculate it.
Why it’s more than just a sales and marketing efficiency metric.
The nuance: contraction, churn, and customer success also affect the number.
Why ARR size and ACV segmentation are critical for accurate benchmarking.
When the metric is most useful (short sales cycles, PLG) vs. when to be cautious (enterprise sales cycles).
Why It Matters for SaaS Operators & Investors:
The Magic Number is a widely used investor metric to gauge efficiency.
Clean reporting builds confidence with investors and supports higher company valuations.
Benchmarks by ARR and ACV provide a realistic picture of growth efficiency.
Using the wrong interpretation can lead to bad decisions in finance strategy and fundraising.
Resources Mentioned:
Blog Post: https://www.thesaascfo.com/calculate-saas-magic-number/
Five-Pillar SaaS Metrics Framework: https://www.thesaasacademy.com/the-saas-metrics-foundation
🧾 Quote from Ben
“Don’t just beat up sales and marketing when the magic number is low — churn, support, and customer success all play a role in this metric.”
6 min
August 28, 2025 7 Metrics a Strategic Acquirer Wants to See in Your SaaS Business
When a strategic acquirer or private equity firm comes knocking, they’ll ask for more than your headline ARR number. In episode #309, Ben Murray shares the seven critical numbers that buyers want to see before moving forward with a deal. These SaaS metrics and investor metrics are not only central to due diligence but also directly impact your company's valuation.
From ARR and contracted ARR to retention and RevRec policies, you’ll learn what to prepare now so you’re ready for the call — whether it’s tomorrow or two years from now. The point is to be prepared!
What You’ll Learn:
- The 7 metrics that this giant investment fund wants to see
- Preparing your 4 key data sources
- Don't wait; be prepared today

Why These Numbers Matter:
- Fundraising & Exits: Acquirers use these metrics to assess risk, scalability, and long-term value.
- Valuation Impact: Clean data on ARR, retention, and profitability drives higher multiples.
- Investor Confidence: Reliable reporting reduces due diligence friction and builds trust. Don't fall prey to "deal fatigue!"
Resources Mentioned:
🎓 SaaS Metrics Academy – https://www.thesaasacademy.com/the-saas-metrics-foundation-course-community-phased
Quote from Ben
“If a buyer calls you today, you need these seven numbers ready — clean, accurate, and tied to a strong finance foundation.”
6 min
August 23, 2025 Customer Concentration Risk Will Kill Your Fundraise or Exit
When preparing for fundraising or an exit to private equity, one overlooked metric can derail your deal: customer concentration risk. In episode #308, Ben Murray explains what customer concentration is, why it matters to investors, and how it can directly impact your SaaS valuation.
If too much of your revenue comes from just one or two customers, that risk may scare off private equity buyers or lower your valuation. Ben breaks down how to measure concentration, when it becomes a problem, and why you should start planning now — long before you enter a due diligence process.

What You’ll Learn
• What customer concentration is and how to calculate it.
• Why concentration risk is a key investor metric in fundraising and exit planning.
• How high concentration can lower a company's valuation.
• The difference between strategic buyers and private equity when assessing risk.
• Why SaaS operators must monitor revenue mix as part of long-term financial strategy.

Why It Matters
• Finance & fundraising impact: High concentration can reduce your chances of raising capital or exiting at a premium.
• Valuation risk: Heavy reliance on a small number of customers lowers buyer confidence.
• Investor confidence: PE firms and strategic buyers want diversified, predictable revenue streams.

Resources Mentioned
SaaS Metrics for Investors – What Drives Valuation: https://www.thesaasacademy.com/the-saas-metrics-foundation

Quote from Ben
“If one customer makes up 25% of revenue, that’s a huge risk to a buyer — especially in private equity.”
3 min
August 20, 2025What Gross Margin Should I Use in CAC Payback Period
The CAC payback period is one of the most important SaaS metrics — and a top investor metric used in boardrooms, fundraising, and valuation discussions. But here’s the nuance: which gross profit should you use when calculating it?
In episode #307, Ben Murray explains why CAC payback must be gross margin adjusted and why using your company’s total blended gross margin is a mistake. Instead, you’ll learn how to align ARR, MRR, and revenue streams with their specific gross profit to get an accurate picture of sales efficiency and scalability.
This lesson is especially critical for scaling SaaS and AI businesses as miscalculations here can distort your financial model, mislead investors, and even impact your company's valuation.
What You’ll Learn
Why CAC payback is a must-have metric in your financial dashboard.
The correct gross profit to use in CAC payback calculations.
How to calculate CAC payback when you have multiple revenue streams (subscription, usage, services, hardware).
Why large SaaS companies may need segmented CAC payback periods for different products or business units.
How an accurate accounting foundation prevents “accounting debt” that complicates metrics and valuation later.
Why It Matters
Investors rely on CAC payback to judge efficiency and growth potential.
Using the wrong gross profit skews results and undermines trust in your financial metrics.
Clean accounting systems and segmentation enable accurate benchmarking, which strengthens your story in fundraising and valuation discussions.
Resources Mentioned
📄 Blog Post: How to calculate CAC payback the right way (with examples): https://www.thesaascfo.com/how-to-calculate-cac-payback-period-with-variable-revenue/
🎓 SaaS Metrics Course: https://www.thesaasacademy.com/the-saas-metrics-foundation-course-community-phased
Quote from Ben
“You can’t just throw total company gross profit into CAC payback. It has to be tied directly to the revenue stream — otherwise the metric is meaningless.”
4 min
August 14, 2025Are AI Companies Out Funding Pure-Play SaaS?
Is the AI funding boom overshadowing traditional SaaS? In episode #306, Ben Murray shares fresh fundraising data from over 8,000 tracked funding events to see how AI-native companies compare to pure-play SaaS in investor activity.
Analyzing the first week of August, Ben breaks down the percentage of companies that are AI-first and how many SaaS products now include AI features or LLM integrations. If you’re a SaaS operator, founder, or investor, this is a quick pulse check on where capital is flowing — and what it might mean for your valuation and fundraising strategy.
🧠 What You’ll Learn
Funding Breakdown – % of AI-native vs. pure-play SaaS companies receiving investment.
Feature Adoption – The 50/50 split on companies adding AI or LLM features.
Why the line between AI and SaaS is getting blurry in business models.
How these trends might influence investor metrics, competitive positioning, and long-term company valuation.
📎 Resources Mentioned
CAC Payback Period: https://www.thesaascfo.com/how-to-calculate-cac-payback-period-with-variable-revenue/
SaaS Metrics and Financial Management Course: https://www.thesaasacademy.com/the-saas-metrics-foundation-course-community-phased
🧾 Quote from Ben
“The lines between SaaS and AI are blurring. A lot more AI is being embedded into pure-play SaaS products."
3 min
August 12, 2025Top SaaS Metrics When Scaling to $1M ARR
What SaaS metrics and financial metrics really matter when you’re scaling toward your first $1 million in ARR? In episode #305, Ben Murray breaks down the essential numbers to track using his Five Pillar SaaS Metrics Framework. From building a strong accounting foundation to tracking investor metrics like retention, bookings, and gross profit, this episode gives you the tools to set your business model up for scale and eventual company valuation growth.
Whether you’re a founder, CFO, or finance lead, you’ll learn how to implement the right KPIs before you cross the $1M mark, so you can confidently present metrics to your team and/or investors and operate with clarity.
What You’ll Learn:
SaaSfy Your Accounting Foundation
Why your accounting system (QBO, Xero, etc.) needs a SaaS-specific structure.
How a clean P&L improves your ability to track revenue, margins, and KPI’s.
Track Bookings Data Early
Why executed contracts (new ARR, expansion ARR, and contraction) are one of the most important SaaS numbers.
How bookings feed your go-to-market efficiency calculations and help measure sales ROI.
Retention Is Key
Gross revenue retention, net revenue retention, renewal rates, and logo retention — and when each matters most.
How retention signals product-market fit and impacts valuation.
Other Metrics to Watch
Gross profit, EBITDA, cash flow forecasting, and cash runway.
How do these connect to financial strategy and your long-term investor metrics?
Why These Metrics Matter Before $1M ARR:
Creates a financial systems foundation for scale.
Equips you to benchmark your performance against peers.
Builds a data story for fundraising and valuation discussions.
Avoids costly gaps in financial modeling once growth accelerates.
Resources Mentioned"
🎓 SaaS Metrics Foundation Course – next cohort starts October 7th.
👉 Learn More: https://www.thesaasacademy.com/the-saas-metrics-foundation-course-community-phased
🧾 Quote from Ben
“If you don’t have your accounting foundation and bookings data in place before $1M ARR, you’re setting yourself up for chaos as you scale.”
5 min
August 08, 2025The Top 3 SaaS Metrics That Drive Your SaaS Valuation
What SaaS metrics actually move the needle on your company valuation? In episode #304, Ben Murray shares his “Power 3” SaaS metrics — the three investor metrics that consistently signal scalable growth and increase SaaS valuations. While many articles list “top metrics” without context, these three have proven to be the most impactful in boardrooms, investor meetings, and due diligence.
If you want to attract investors, strengthen your business model, and maximize your valuation, start by mastering these three metrics.
What You’ll Learn:
Gross Profit
Why high gross profit (80%+ for pure-play SaaS) is a foundation for growth.
How revenue mix and margins by stream impact scalability and valuation.
Gross Revenue Retention (GRR)
Why GRR is the ultimate measure of product stickiness.
How poor retention erodes efficiency and drags on working capital.
ROSE (Return on SaaS Employees)
Ben’s proprietary alternative to “revenue per FTE.”
Now updated to account for AI-driven roles that replace human labor.
Why ROSE is more accurate for modern SaaS org efficiency.

Why These Metrics Matter for Investors & Valuation
Investors look for predictable, efficient growth — these metrics show exactly that.
High gross profit and retention indicate a sustainable business model.
ROSE reveals operational efficiency that supports long-term profitability.
Together, these KPIs create a clear narrative for maximizing company valuation.

Resources Mentioned:
The Power 3 SaaS Metrics — Blog post + downloadable templates: https://www.thesaascfo.com/the-power-3-saas-metrics-that-predict-if-youll-scale-or-stall/
Quote from Ben:
“If I could only choose three metrics to see if you’re scaling the right way, it would be gross profit, gross revenue retention, and ROSE.”
5 min
August 05, 2025How to Code Executive Expenses in Your SaaS P&L for Accurate Metrics
Accurate expense coding is critical to building a clean SaaS P&L that drives investor confidence, valuation discussions, and clarity in internal metrics. In episode #303, Ben Murray explains exactly where SaaS operators should code executive-level expenses (CMO, CRO, VP of Services, CFO, etc.) and why coding accuracy is a non-negotiable for both SaaS metrics and investor metrics.
Ben also highlights the common mistake of letting G&A become a dumping ground, which can distort key financial metrics, including your gross profit margin, OpEx profile, and overall SaaS valuation.
What You’ll Learn:
Where to code executive salaries and expenses in your SaaS P&L
Why department-level cost centers (Sales, Marketing, Services, etc.) are crucial for accurate SaaS metrics
How misclassifying expenses can hurt your valuation and confuse investors during due diligence
The golden rule: G&A should not be a dumping ground
Tips on ensuring your bookkeeping process supports clean financial reporting
Why It Matters for SaaS Operators & Investors:
Accurate SaaS P&L structures are essential for clean reporting to boards and investors.
Incorrect coding can skew key investor metrics like gross margin and operating expense ratios.
A well-coded SaaS P&L provides the foundation to benchmark your business, manage spend, and maximize company valuation during fundraising or exit processes.
Resources Mentioned:
How to Properly Structure Your SaaS P&L (Blog Post + Example Template)
Quote from Ben:
“As a CFO, G&A isn’t a catch-all—it should only hold true G&A costs. Every expense needs to follow the people creating it.”
4 min
July 30, 2025How to Align ARR Growth with Sales & Marketing Spend
You’ve added new ARR—but are you spending too much to get it? In episode #302, Ben Murray walks through two practical ways to align your ARR growth with your sales and marketing spend. If you're unsure whether you're underinvesting, overspending, or just inefficient, this episode will help you benchmark your GTM motion using real data and operator-friendly metrics.
What You’ll Learn
Two ways to triangulate S&M spend relative to ARR
OpEx profile: Sales & Marketing spend as a % of revenue
Cost of ARR: Spend required to acquire $1 of net new ARR
Why relying on benchmarks without context (like ACV or price point) can mislead your analysis
The difference between investment level and go-to-market efficiency
Where to find benchmarks by ACV stage using Benchmarkit.ai (Ray Rike’s dataset)
Why It Matters
Your sales & marketing efficiency plays a critical role in sustainable SaaS growth
Proper benchmarks help you avoid overspending—or underinvesting—in growth
Helps investors and operators answer: “Is our GTM engine working?”
Resources Mentioned
Cost of ARR Blog Post + Template: https://www.thesaascfo.com/saas-cac-ratio/
Benchmark data: Benchmarkit.ai
Quote from Ben
“I love the Cost of ARR—because whether your ACV is $500 or $50,000, it normalizes efficiency across go-to-market models.”
3 min
July 29, 2025Is Revenue Recognition Messing Up Your Retention Numbers?
Does your retention data feel off—or even meaningless—because of catch-up invoices, credit notes, or daily revenue recognition? In episode #301, Ben Murray explains how proper revenue recognition practices can sometimes interfere with clear retention reporting and what SaaS operators can do about it.
Learn how to build a pro forma MRR schedule that strips out accounting noise and gives you clean, consistent retention metrics you can actually rely on.
What You’ll Learn
Why revenue recognition can distort retention metrics, even if your accounting is correct
The difference between GAAP-based MRR and a pro forma MRR schedule
How Ben built and used a pro forma model during a private equity exit process
How to build your own pro forma MRR schedule using invoice data
The critical role of invoice data as your source of truth
Tools & Resources
BackOfficeTools App: Upload your invoice data and generate retention metrics. Check out the tutorial here to learn more and sign up: https://www.thesaasacademy.com/offers/zz3ZR2WL
Key Quote from Ben
“We still follow proper revenue recognition, but when it comes to retention, sometimes we need a second view. A pro forma MRR schedule helps us cut through the noise.”
4 min

About SaaS Metrics School

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Ben Murray brings you actionable SaaS metrics lessons that he has learned through years of being in the SaaS CFO trenches. Whether you are new to SaaS or a SaaS veteran, learn the latest SaaS and AI metrics, finance, and accounting tactics that drive financial transparency and improved decision-making.