A common misconception about subscription businesses is that success hinges solely on the customers acquired.
While gaining subscribers is important, it’s far from the full picture. Many companies focus heavily on customer acquisition but overlook other critical subscription business metrics that drive long-term growth.
The truth is, your ability to thrive in the subscription space depends just as much on tracking and optimizing the right metrics as it does on bringing in new customers.
Subscription business metrics offer deep insights into your company’s performance, helping you understand customer behavior, find areas for improvement, and uncover opportunities to maximize revenue.
In this post, we'll examine seven key metrics you should track if you have a subscription-based business model.
To measure the performance of a subscription business, you need to look beyond revenue alone.
This is because subscription businesses focus more on customer retention as opposed to client acquisition. This approach makes their revenue recurring, sustainable, and, to an extent, predictable.
This goes to show just how important it is to keep tabs on subscription business metrics, to ensure a steady flow of revenue.
In this post, you’ll learn about seven subscription business metrics that you should track. But first, let’s understand what subscription business metrics are and why they matter.
Every business has its key performance indicators. When it comes to subscription businesses, performance is gauged using specific, quantifiable metrics commonly known as subscription business metrics.
There are many subscription business metrics that you can track and every business can choose to focus on different metrics.
Here’s an example of the three key subscription business metrics that this company deems important.
Image via Business Model Company
These metrics help analyze your subscription rates, retention rates, and revenue earned.
It's important to choose the right subscription business metrics instead of getting lost in numbers. The subscription business metrics you choose should be aligned with your business goals.
But why is it important to track your subscription business metrics?
Here are a few reasons:
With the information provided by these subscription business metrics, you can make more accurate future projections to drive your business toward success.
There are numerous metrics a business could use to track its performance. But only a few truly reflect the most important aspect of a subscription business.
Here are the most essential subscription business metrics you should consider:
MRR refers to the total revenue a business receives per month from active subscriptions.
It’s one of the most important metrics for any subscription business. This is because it shows the total monthly amount of revenue received from active subscriptions. It’s the most common KPI used in recurring businesses.
You get your MRR by multiplying your total number of customers with their monthly subscription rates.
This goes for annual, quarterly, and semiannual subscription plans as well. In such cases, you’ll find the monthly rate by dividing the total rate by the number of months.
Apart from MRR, you can also track other monthly numbers, such as new accounts, upsells, downsells, and churn.
For instance, if there are new customers, upgrades to premium packages, or downgrades, you may choose to compute net MRR.
This would mean analyzing these computations differently from subscriptions that have existed throughout the month. This provides even more granular results.
Certain charges and items are excluded when calculating monthly recurring revenue. These include charges such as:
To effectively calculate MRR, use a reliable B2B subscription management solution to track SaaS metrics.
A good tool like Younium can automate data collection and analysis, providing detailed reports and insights to help you streamline your financial processes and optimize your performance.
This subscription business metric analyzes your business’s recurring revenue for a year. Here, you take your monthly recurring rate and multiply it by 12.
If your subscription terms are annual, this is the best metric to measure rather than MRR. ARR is calculated by adding up each annual subscription fee and excluding non-recurring revenue.
You should also deduct freemiums accounts to exclude months where payments were not requested.
Annual recurring revenue is important as it helps track your annual performance trends. These are especially useful when setting a business’s long-term goals.
It gives you ample data to make accurate financial projections.
With annual recurring rates, you can determine what strategies work better in boosting your business’s performance.
Such changes may include:
With data from annual recurring revenue, your long-term decision-making process becomes clearer.
Every subscription business wants a low churn rate—the rate at which customers terminate their subscriptions. This makes it one of the most important subscription business metrics there are.
A high churn rate reflects negatively on your subscription business and is often a sign that some changes are required to avoid losing customers.
According to Statista, subscription businesses across different regions witnessed an increase in churn rates in 2023.
Image via Statista
According to data, 49% of US-based subscription commerce companies experienced an increase in customer churn in 2023.
You’ll notice that for some industries, such as cable and general retail, the rates are particularly high.
So how high is too high?
Churn rates between 5% and 7% are considered manageable. Anything above that needs immediate action.
Churn rates can be calculated monthly, quarterly, semiannual, or annual basis. For the most actionable insights, monthly churn calculations are encouraged.
To calculate churn rate, divide the number of customers lost during a period by the total number of customers at the beginning of that period. You then multiply the result by 100 to get the percentage.
You can also factor in additional elements, such as the length of time subscriptions lasted before cancellation. This improves accuracy and provides deeper insight.
Churn rates are important because they help you understand why your customers are leaving, allowing you to take corrective action and improve retention.
Some factors that can lead to high churn rates are:
Once you identify the cause of your rising churn rates, you can take some steps to reduce it. Such actions may include:
Here’s an example of a form by Userpilot for collecting the reasons for ending a subscription:
Image via Userpilot
Beyond gathering cancellation reasons, Userpilot also asks customers how services can be improved and may offer incentives to continue their subscription.
Image via Userpilot
Another important churn-related metric every business should track is revenue churn rate.
In addition to monitoring how many users unsubscribe, it’s crucial to understand the financial impact of churn.
Revenue churn measures how much revenue is lost due to subscription cancellations and downgrades.
This is one of the subscription business metrics that monitors the average monetary contribution of each account to your business.
It’s a more specific way of analyzing revenue compared to the monthly recurring revenue, especially for tiered subscriptions.
This is because you can analyze ARPA by plan or package, which provides more granular insights.
When calculating ARPA, you take your total monthly recurring revenue and divide it by your total number of subscribers. This may include freemium subscribers, depending on how your business defines ARPA.
ARPA helps determine how much of your revenue comes from higher-priced packages versus lower-priced ones.
For instance, an upward trend in ARPA may indicate an increase in your premium subscriptions.
Similarly, a downward trend may indicate an increase in lower-tier plans or downgrades.
This metric also helps determine whether the revenue generated by paid subscriptions can sustainably support free plans, if any, to contribute to long-term growth.
It can also show whether free plans are converting into enough paid subscriptions to remain viable. ARPA is particularly useful for tiered subscription models like the one shown below:
Image via Zendesk
ARPU is a metric most commonly used by B2C companies, where the user is the buyer. In the B2B world, businesses typically use ARPA (average revenue per account), which follows the same principle but assumes the buyer is an organization rather than an individual.
Although not an exclusive subscription business metric, CAC indicates how efficiently you budget your resources.
Your customer acquisition cost should be as low as possible and ideally significantly lower than your customer’s lifetime value. Acquiring new customers should be profitable.
To calculate CAC, you take the total sales and marketing costs directed toward customer acquisition and divide that by the total number of new customers acquired during a given period.
When analyzing customer acquisition cost, it’s important to break it down by individual marketing channels.
For instance, separate email marketing costs from social media marketing costs. Similarly, track the customers acquired through each channel when calculating CAC.
CAC also helps determine the effectiveness of each method of marketing you use. allowing you to manage sales and marketing efforts more effectively.
You should always strive to keep your marketing costs at a minimum. How do you do that?
Here’s how.
This may be the last point discussed, but it’s easily one of the most important subscription business metrics.
Customer lifetime value represents the total revenue a customer is expected to generate over the entire duration of their relationship with your business. This could span a month, a year, or longer.
Ideally, the revenue generated by each customer over their lifetime should exceed the cost incurred in acquiring and servicing them.
As such, this metric is closely tied to three other subscription business metrics, including:
Here’s how Customer Lifetime Value is calculated:
Image via CommentSold
A low customer lifetime value may be caused by:
Other factors that may require broader strategic changes, such as revisiting your marketing strategy
Once you know your CLV, you can make more informed decisions about how much to spend on customer acquisition, helping reduce unnecessary costs.
CLV also helps you identify your most valuable customers. This insight allows you to focus on retaining these customers and acquiring similar high-value ones.
You can also analyze why your high-value customers prefer your product or service — whether it’s functionality, the problem it solves, or how it compares to alternatives.
These insights can then be used as stronger positioning and messaging to attract more profitable customers.
NPS is an important subscription business and SaaS metric that measures customer satisfaction and loyalty. It gauges how likely your customers are to recommend your service to others.
You can calculate NPS by sending a survey to ask customers about their chances of recommending your business to others, using a 10-point scale from unlikely to extremely likely.
Based on the ratings, categorize the customers into three groups:
To calculate your NPS, subtract the percentage of Detractors from the percentage of Promoters. The result is a score ranging from –100 to +100.
Image via BowNow
A high NPS indicates that your customers are satisfied and willing to recommend your business to others. This often reflects strong product–market fit, effective customer service, and churn risk.
Conversely, a low NPS signals that improvements may be needed in your product, customer support, or overall service experience.
1. How do you measure the performance of a subscription business?
You can track key subscription business metrics to measure your business performance. Some important metrics to consider include:
Using a subscription management solution like Younium can simplify the process of tracking these metrics. Younium helps you track key subscription metrics and provides detailed reports that deliver insights into business performance, churn, and revenue trends.
2. How do you calculate average subscription revenue?You can calculate subscription revenue on a monthly, annual, or per-account basis. For subscription businesses, measuring recurring revenue (monthly or annual) is more meaningful than looking only at total revenue for a given period.
To calculate average subscription revenue, multiply the number of subscribers by the average revenue per subscriber or account.
3. How do you evaluate a subscription business model?A subscription business model can be evaluated based on:
The subscription business metrics discussed in this post help provide a clear, data-driven view of overall performance and sustainability.
Common subscription business metrics include:
Using a subscription management platform like Younium helps track all these metrics and generate customized reports for deeper insights.
5. What is the most important SaaS metric?The most important subscription business metric depends on your business model and your role within the organization.
A company’s North Star metric is typically its most important metric, as it reflects long-term success. A North Star metric tracks value creation by measuring revenue conversion, customer impact, and overall business progress.
6. How does Younium work as an insights and reporting tool for subscription metrics?
Younium serves as a centralized insights and reporting platform for subscription businesses. It automatically collects data from billing, CRM, and ERP systems, ensuring a single source of truth for all subscription metrics.
Through configurable dashboards and AI-powered analytics, Younium helps finance and operations teams monitor key KPIs like MRR, ARR, churn, and customer lifetime value in real time.
It also enables forecasting, anomaly detection, and performance tracking across entities, products, and regions — giving teams actionable insights instead of static reports.
In short, Younium turns raw subscription data into decision-ready intelligence, helping SaaS companies optimize growth, reduce revenue leakage, and stay audit-ready at all times.
7. What is Younium?
Younium is a subscription management and revenue operations platform built for complex B2B SaaS businesses. It automates billing, revenue recognition, and reporting while providing advanced analytics to manage the full subscription lifecycle.
Younium integrates seamlessly with leading ERP, CRM, and payment systems, offering a scalable and compliant foundation for subscription businesses that operate across multiple markets and currencies.
8. What are the best SaaS reporting platforms?
The best SaaS reporting platforms help businesses centralize data, automate financial reporting, and visualize subscription performance in real time. Some of the most capable options include:
Each of these tools serves different business needs. Younium stands out for scaling and enterprise SaaS teams that require end-to-end subscription management, compliance, and reporting in a single platform.
Of all the subscription business metrics listed above, there are likely a few that best reflect your business’s performance.
Consistently tracking the right subscription business metrics is key to ensuring your business scales sustainably.
With the right subscription software, you can manage billing data, performance metrics, and analytics from a single platform. Having centralized and structured data makes it easier to track subscription business metrics accurately and consistently.You can contact Younium to request a demo if you'd like to explore this approach.
Choose the subscription business metrics that align with your goals and start tracking performance with confidence.