Why SaaS businesses lose money before they make it (and the metrics that matter)

Original: The Guide to SaaS Metrics

May 29, 2025

5 min read

Guide

Intermediate

Business Understanding

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Summary

Understand key SaaS metrics that influence profitability, such as recurring revenue, churn, and the 'triangle of despair' - the balance between customer acquisition, retention, and revenue growth.

Who This Is For

Founders

Business Analysts

Product Managers

Key Takeaways

Understand the 'Triangle of Despair' - why SaaS companies are inherently unprofitable initially and lose more money as they grow faster
Learn to calculate and interpret key SaaS metrics like LTV:CAC ratio, payback period, and ARR to gauge business viability
Master cohorted vs uncohorted retention analysis to understand true customer behavior patterns over time
Discover how to operationalize metrics for board reporting and fundraising conversations
Apply the Magic Number and Burn Multiple to assess capital efficiency and growth sustainability

Tools & Technologies

Equals ARR tracking systems Customer analytics platforms Cohort analysis tools

Topics Covered

saas-metrics recurring-revenue unit-economics business-models

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