When should a startup start tracking revenue metrics?

Once you have consistent signals of product-market fit — users returning regularly, organic referrals, and willingness to pay. Tracking revenue too early can mislead you into optimizing pricing when you should be iterating on the product.

What is the Rule of 40 for SaaS companies?

The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should equal or exceed 40%. For example, a company growing at 30% YoY with a 10% profit margin hits the Rule of 40. It's most relevant for companies above $10M ARR.

What ARR milestones define startup stages?

Roughly: pre-PMF is under $100K ARR, early PMF is $100K–$1M, scaling is $1M–$10M, and late stage is $10M+. But stage is about business model maturity, not just revenue — a company at $500K ARR with no repeatable sales process is still early.

Startup metrics

Metrics by startup stage

The right metrics depend on your stage. Here's exactly what to track (and what to ignore) at each phase of your B2B SaaS journey.

The metrics that matter change as your startup evolves. Tracking the wrong ones for your stage wastes time and creates false confidence. Here’s what to focus on when.

Metrics focus by stage
Stage	Primary KPI	ARR range	Key supporting metrics
Pre-PMF	WAU	< $100K	Activation rate, feature adoption, NPS
Early PMF	MRR	$100K – $1M	Churn rate, CAC, LTV:CAC ratio
Scaling	MRR (efficiency)	$1M – $10M	NRR, burn multiple, gross margin
Late stage	ARR + Rule of 40	$10M+	FCF margin, NRR, revenue per employee

Pre-product market fit

Primary KPI: Weekly Active Users (WAU)

You’re still figuring out what customers want. Revenue metrics are misleading here — someone might pay for something they don’t really love, especially with annual contracts. Focus on whether people keep coming back.

Track these:

Weekly/Daily Active Users
Activation rate (signup → core action)
Feature adoption rates
Customer interviews per week
NPS or product-market fit survey score

Ignore these (for now):

MRR — you’re optimizing for learning, not revenue
CAC — you’re not scaling acquisition yet
Churn rate — sample size is too small to be meaningful
LTV — customers haven’t been around long enough

Key benchmarks at pre-PMF

> 40% PMF survey

10–20% w/w WAU growth

50+ NPS

What to do: Interview customers weekly. Ship fast. Measure whether people use what you build and come back unprompted. Look for signals of love — not just usage, but enthusiasm.

Early product market fit

Primary KPI: Monthly Recurring Revenue (MRR)

You’ve found something customers want and pay for. Now prove it can grow sustainably. This is where unit economics start to matter.

Track these:

MRR and month-over-month growth rate
Customer Acquisition Cost (CAC)
LTV:CAC ratio
Monthly churn rate
ARPU

Key benchmarks at early PMF

15–20% m/m MRR growth

3:1+ LTV:CAC

< 18 mo CAC payback

< 5% Monthly churn

What to do: Optimize onboarding and sales. Double down on acquisition channels that work. Start measuring cohort retention to catch problems early.

Scaling growth

Primary KPI: MRR, with focus on efficiency

The model works — now scale it without burning cash irresponsibly. Efficiency metrics become critical. A startup growing 20% MoM with a 5x burn multiple is in worse shape than one growing 12% MoM with a 1.5x burn multiple.

Track these:

Net Revenue Retention (NRR)
Burn multiple (net burn ÷ net new ARR)
CAC by channel
Gross margin
Sales efficiency metrics

Key benchmarks at scaling

110%+ NRR

80%+ Gross margin

< 2x Burn multiple

< 12 mo CAC payback

What to do: Optimize unit economics across all channels. Build scalable customer success. Expand into adjacent markets. If your burn multiple is above 2x, fix efficiency before pouring more into growth.

Late stage / pre-IPO

Primary KPI: ARR and Rule of 40

At this point you’re balancing growth with profitability. The Rule of 40 (revenue growth rate + profit margin ≥ 40%) is the benchmark investors and boards watch closely.

Track these:

ARR and year-over-year growth
Rule of 40 score
Free cash flow margin
Revenue per employee
NRR (should be 120%+)

Key benchmarks at late stage

40%+ Rule of 40

20%+ FCF margin

120%+ NRR

85%+ Gross margin

How to know when to shift stages

The biggest mistake is switching your primary KPI too early or too late. Too early: you optimize for revenue before you have real product-market fit. Too late: you keep tweaking engagement when you should be proving the business model.

Signs you’ve reached PMF and should shift to MRR:

Consistent organic referrals without incentives
Users return multiple times per week without prompting
You can predict customer behavior and early lifetime value
Sales conversations focus on implementation, not convincing

Signs you should shift from growth to efficiency:

Burn multiple consistently above 2x
CAC rising faster than LTV
Team scaling faster than revenue
Investors asking about path to profitability

Try this in Basedash

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Frequently asked questions

When should a startup start tracking revenue metrics?: Once you have consistent signals of product-market fit — users returning regularly, organic referrals, and willingness to pay. Tracking revenue too early can mislead you into optimizing pricing when you should be iterating on the product.
What is the Rule of 40 for SaaS companies?: The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should equal or exceed 40%. For example, a company growing at 30% YoY with a 10% profit margin hits the Rule of 40. It's most relevant for companies above $10M ARR.
What ARR milestones define startup stages?: Roughly: pre-PMF is under $100K ARR, early PMF is $100K–$1M, scaling is $1M–$10M, and late stage is $10M+. But stage is about business model maturity, not just revenue — a company at $500K ARR with no repeatable sales process is still early.