What will define SaaS success in 2025? 

As the industry evolves, so do the metrics that guide businesses toward sustainable growth and profitability. Identifying the right metrics is more than an academic exercise—it’s a strategic imperative. The metrics you prioritize can shape your decisions, influence your investments, and ultimately determine whether or not your revenue charts curve up and to the right.

So, to uncover the most critical SaaS metrics for 2025, we turned to the experts. 

We interviewed nine leading SaaS professionals who shared their insights into the metrics they believe will drive success in the coming year. Here’s a quick look at the metrics they chose:

1. Growth Rate
2. Cash Burn and Cash Runway
3. Customer Acquisition Cost (CAC)
4. Revenue Acquisition Cost (RAC)
5. Annual Recurring Revenue (ARR) and Net Dollar Retention (NDR)
6. Burn Multiple and Rule of 40
7. ARR per Employee
8. Revenue per Employee
9. The Rule of X

Now, let’s dig into why these metrics matter and what steps you can take to improve them.

The SaaS Metrics That Will Define 2025

1. Growth Rate: Todd Gardner 

Todd Gardner highlighted Growth Rate as the most important SaaS metric for 2025. In his words, “Growth never lost its relevance and has always been more important than profits in terms of valuation.” 

While recent years forced companies to prioritize profitability due to limited capital, Todd emphasizes that this is changing. “In the capital-starved environment of the last few years, profits trumped growth because companies needed profits to survive. But as the AI bubble cools, VCs will return to a historically profitable playbook of investing in high-growth B2B SaaS.”

Todd also acknowledges the challenges ahead: “Driving growth in 2025 will be harder than before. There is an economic SaaS headwind, and the growth needs to be supported by solid unit economics. But unlike the last few years, I think growth in 2025 will be rewarded handsomely.”

Why it matters:

• Your company’s growth rate reflects its ability to scale and capture market share—key factors for attracting investment.
• As the AI hype settles and venture capital returns to growth-focused strategies, companies with high growth rates will stand out and secure better valuations.

About Todd Gardner:

Todd Gardner is a seasoned SaaS expert and entrepreneur with a deep understanding of SaaS growth strategies and unit economics. With decades of experience in building and scaling SaaS businesses, Todd is known for his ability to help growing SaaS companies bridge profitability and growth.

2. ARR per Employee: Michelle Valentine

Michelle Valentine identified ARR per Employee as a defining SaaS metric for 2025. She explains, “As businesses balance growth with operational efficiency, this metric reveals which companies can truly do more with less.” ARR per Employee measures how effectively a company generates recurring revenue relative to its workforce size, making it a critical benchmark for efficiency.

Michelle emphasizes the importance of optimizing headcount investments while challenging conventional hiring practices. “Establish ratios for non-quota-carrying hires per revenue-generating role and rigorously evaluate current staffing needs instead of automatically backfilling positions,” she advises. However, she warns against underinvesting in complementary programmatic spend, like paid search, that amplifies the impact of headcount investments.

She also notes how AI will accelerate this trend: “The companies showing the strongest ARR per employee aren’t just being conservative with hiring—they’re fundamentally rethinking how work gets done.”

Why it matters:

• ARR per Employee reflects a company’s ability to scale efficiently, reducing overhead while maintaining growth.
• AI and automation are redefining operational workflows, enabling lean teams to deliver exceptional results.
• Companies excelling in this metric demonstrate innovation and adaptability, critical for thriving in a competitive market.

How you can improve ARR per Employee in 2025:

1. Optimize your workforce planning: Set clear metrics and guardrails for your company’s headcount growth, such as the ratio of your sales reps to support staff. Then, backfill any open roles only after assessing the redistribution of your employees’ workloads.
2. Leverage AI and automation: Apply artificial intelligence and bots to reduce manual processes and free up your teams’ creative bandwidth. As machines handle repetitive tasks, your people will be empowered to focus on higher-impact initiatives.

About Michelle Valentine:

Michelle Valentine is the Co-founder & CEO at Anrok, an industry leading, global sales tax platform specifically built for software companies.

3. Cash Burn and Cash Runway: Chris Ortega

Chris Ortega underscores the importance of Cash Burn and Cash Runway as the most critical SaaS metrics of 2025. In his words, “Cash is king. It doesn’t matter how much you’re growing or if you’re hitting triple digits—if you’re not able to pay payroll, nothing else matters.” 

With investors shifting their focus away from top-line growth alone, Chris emphasizes that financial stability and efficiency are paramount.

“The most important metric is cash burn; the second most important is cash runway,” Chris states. To thrive in 2025, SaaS companies need a deep understanding of their cash inflows and outflows. “How are you getting as much cash in as quickly as possible, and how are you stretching those dollars out as long as possible?”

Why it matters:

• Cash burn measures how quickly your company is spending its reserves, a critical indicator of operational efficiency.
• Cash runway calculates how long your business can sustain operations without additional funding, a key metric for surviving economic uncertainty.
• Managing these metrics effectively ensures your company can weather challenges and seize growth opportunities.

How you can improve Cash Burn and Cash Runway in 2025:

1. Optimize your Cash Inflows: Build strong relationships with banks and investors to secure favorable short-term financing that can buffer cash reserves when needed. You should also streamline your invoice and collection processes to accelerate payments from your customers.
2. Streamline your Cash Outflows: Renegotiate payment terms with vendors to delay outlays if possible. Analyze spending to trim excess or idle capacity. Use credit strategically as a temporary bridge during fluctuations in revenue.
3. Adopt a cash-first mindset: Evaluate every growth initiative through the lens of its impact on cash balances over 6-12 months. Avoid overreliance on external funding by squeezing more runway out of current operations. As the saying goes, “cash is king.”

About Chris Ortega:

Chris Ortega is a finance expert and the CEO of Fresh FP&A, specializing in financial planning and analysis for SaaS companies. He is passionate about helping businesses master cash flow management, optimize burn rates, and achieve financial resilience.

4. Customer Acquisition Cost (CAC): Josh Aharonoff

Josh Aharonoff pointed to Customer Acquisition Cost (CAC) as the most important SaaS metric for 2025. “Investors are no longer prioritizing growth at all costs; efficiency is key,” he explains. CAC measures the efficiency of acquiring new customers relative to the cost of marketing and sales efforts, making it a critical focus for sustainable growth.

Josh also emphasizes the importance of not just tracking CAC but also continuously monitoring its progression. “Develop strong tracking and keep a close eye on how things are progressing,” he advises. This ensures companies can quickly identify inefficiencies and adjust their strategies in real-time.

Why it matters:

• CAC directly impacts your company’s profitability and ability to scale.
• High CAC can indicate inefficiencies in customer acquisition channels, which can drain resources and limit growth potential.
• By prioritizing CAC, you can align your spending with sustainable, long-term success.

How you can improve CAC in 2025:

1. Track and analyze your CAC in detail: Implement tracking to monitor your CAC by each lead source and marketing campaign. Review regularly for trends, then refine your low-performing marketing initiatives
2. Double-down on high-ROI channels: Not all marketing channels are equal. Analyze historical performance to identify those that reliably convert and retain customers from the first purchase onward. Then, shift your budget to double down on the channels with the best unit economics.

About Josh Aharonoff:

Josh Aharonoff is a SaaS finance leader and founder of Mighty Digits, a consultancy focused on helping startups and SaaS companies refine their financial strategies. He is an advocate for efficiency and profitability in customer acquisition.

5. Revenue Acquisition Cost (RAC): Thomas Lah

Thomas Lah introduced Revenue Acquisition Cost (RAC) as a pivotal SaaS metric for 2025. 

“RAC quantifies the cost a company incurs to acquire each dollar of revenue,” he explains, offering a nuanced view of efficiency beyond traditional Customer Acquisition Cost (CAC). RAC evaluates how much is spent on sales and marketing relative to revenue growth, providing a more precise measure of acquisition profitability.

Thomas highlights the growing pressure on SaaS companies to generate revenue more cost-effectively: “Currently, RAC is running at 2.86 for companies in the TSIA Cloud 40, the highest we’ve tracked since Q1 2022. In 2025, there will be immense pressure to grow revenue more cost effectively.”

Why it matters:

• RAC focuses on the efficiency of revenue generation, not just customer acquisition.
• High RAC values indicate inefficiencies in sales and marketing spend, potentially hindering profitability.
• As SaaS markets mature, RAC will help companies balance growth with sustainable economics.

How you can improve RAC in 2025:

1. Leverage AI in your Sales and Marketing workflows: Thomas notes, “TSIA has identified 20 killer AI use cases in revenue generation workflows.” and suggest that other SaaS companies should use AI to enhance the efficiency of their sales account executives and streamline their marketing campaigns.
2. Focus on quality over quantity: Prioritize acquiring higher-value customers and expanding revenue from your existing clients to maximize ROI vs. solely focusing on new customer acquisition.

About Thomas Lah:

Thomas Lah is the Executive Director and Executive Vice President at the Technology & Services Industry Association (TSIA). A thought leader in the SaaS industry, Thomas is known for developing frameworks like Revenue Acquisition Cost (RAC) to drive efficiency in SaaS revenue generation.

6. ARR and Net Dollar Retention (NDR): Anthony Nitsos

For Anthony Nitsos, Annual Recurring Revenue (ARR) remains the cornerstone metric for SaaS success, as it has year after year. 

He stresses that focusing on ARR alone is not enough—it must be paired with Net Dollar Retention (NDR). “The focus needs to be on net dollar retention and protecting the moat so Sales can focus on new growth,” he explains. NDR highlights the health of your recurring revenue base by accounting for upsells, expansions, downgrades, and churn.

By strengthening ARR and NDR, SaaS companies can safeguard their revenue base, freeing up Sales teams to prioritize acquiring new customers without the constant pressure of replacing lost revenue.

Why it matters:

• ARR measures predictable, recurring revenue, providing a clear picture of a SaaS company’s financial stability.
• NDR ensures you’re not just retaining customers but also expanding their value over time, which is critical for sustainable growth.
• Together, ARR and NDR reflect the effectiveness of your customer success and retention strategies, key drivers of long-term profitability.

How you can improve ARR and NDR in 2025:

1. Prioritize customer success: Don’t wait for churn risks to appear—use triggers and workflows to detect them early. Then, strengthen each account relationship and ensure that new customers feel loved through onboarding, training, community events, and timely support.
2. Leverage data analytics: Apply analytics to understand your customers’ usage trends and how they create value from your platform. Then, turn these insights into upsell opportunities and feature improvements that increase the stickiness of your platform.
3. Foster collaboration across your teams: Too often, sales, success, and product teams work in isolation. By aligning them around the customer, these groups can work in tandem and identify new profitable use cases to monetize your existing accounts.

About Anthony Nitsos:

Anthony Nitsos is the founder of SaaS Gurus, a consultancy specializing in optimizing SaaS business operations. With extensive experience in finance and customer success, Anthony helps companies build sustainable recurring revenue and protect their customer base.

7. Burn Multiple and Rule of 40: Alex Diaz-Asper

Alex Diaz-Asper explained the importance of Burn Multiple and the Rule of 40 as complementary metrics for 2025. These metrics provide a clear view of growth efficiency and profitability, helping SaaS companies balance investments with revenue outcomes.

Alex explains, “Burn Multiple captures the efficiency of growth by showing how much net operating cash or EBITDA is burned for every dollar of net new ARR. The lower the number, the better—below 1 means the company is adding more revenue than it’s burning.” He also points out that “the Rule of 40 simplifies the trade-off between revenue growth and profitability, balancing the two in one easy-to-track metric.”

The Rule of 40 combines a company’s revenue growth percentage with its EBITDA margin, and Alex highlights its importance: “You want this to be positive. If you’re burning cash, your growth rate should compensate for that.”

Why it matters:

• Burn Multiple ensures that growth is efficient and not at the expense of long-term viability.
• The Rule of 40 helps companies maintain a healthy balance between growth and operational efficiency, guiding investment decisions.
• Together, these metrics address the need to grow sustainably in an era where pure growth-at-all-costs strategies are no longer viable.

How you can improve Burn Multiple and Rule of 40 in 2025:

1. Optimize revenue growth vs. spend: Ruthlessly prioritize productive growth activities across your sales, marketing and product teams. Then, cut programs that fail to deliver efficient customer acquisition, retention and revenue per account.
2. Strengthen your margins: Whether through pricing adjustments, vendor negotiations or automation, a relentless focus on cost control and margin expansion can fuel growth even in lean times.

About Alex Diaz-Asper:

Alex Diaz-Asper is a finance and SaaS growth strategist with expertise in balancing profitability and growth. He is also a partner and founder at Tarsus, an outsourced accounting and finance company that includes CFO and controller services, as well as core accounting and payroll.

8. Revenue per Employee: CJ Gustafson

For CJ Gustafson, Revenue per Employee is the definitive SaaS metric for 2025. “If I could only choose one metric to evaluate a company in 2025… I’d choose Revenue per Employee. Full stop,” he states. This metric offers a straightforward and transparent view of a company’s scalability and operational efficiency.

CJ explains why this metric is so powerful: “It cuts through all the noise. There’s nowhere to hide. Revenue per Employee is an underused metric that probably offers the best insight into a company’s scalability or eventual operating efficiency.” He also stresses the importance of forward-looking analysis: “A lot of companies look at this metric on a trailing basis but forget to calculate it within their three- and five-year forecasts. You want to be targeting more than $300K in revenue per employee by the time you are at $100 million in revenue. The best companies in the public markets are doing above $500K in revenue per employee.”

Why it matters:

• Revenue per Employee reflects your company’s ability to grow efficiently, balancing headcount with output.
• High-performing SaaS companies set benchmarks of $300K-$500K in revenue per employee, a key indicator of operational excellence.
• Forward-looking analysis ensures you’re not over-hiring, helping maintain efficiency as you scale.

How you can improve Revenue per Employee in 2025:

1. Incorporate Revenue per Employee in your forecasts: Calculate your trailing revenue per employee. And more importantly, model these projected ratios over the next 3-5 years based on your hiring plans, productivity initiatives, and performance benchmarks for your top performers.
2. Prioritize efficiency when hiring: Staff up conservatively and only when clear workload gaps emerge that your existing teams cannot address. Ensure any additions to your departments directly impact your company’s scalability, whether in sales, marketing, engineering or customer success.
3. Invest in productivity tools: Help your current stars shine brighter. Deploy tools like AI, workflow automation and centralized knowledge management to amplify their leverage and effectiveness.

About CJ Gustafson:

CJ Gustafson is the CFO of PartsTech and serves as a financial advisor for several SaaS companies. He also regularly writes about software finance tips, metrics, and general business advice through his newsletter, Mostly Metrics.

9. The Rule of X: Caty Rea

Caty Rea stated that The Rule of X as the most critical SaaS metric for 2025. 

This evolution of the traditional Rule of 40 places a greater emphasis on growth, using a 2x-3x multiplier for revenue growth relative to profitability. As Caty explains, “The Rule of X highlights the relative importance of growth vs. profitability as the primary drivers of long-term value, especially for mature, efficient companies.”

She highlights the shifting investor mindset in 2025: “While efficiency remains vital, growth outshines short-term free cash flow (FCF) in valuation importance. Data shows that a growth-weighted model has higher predictive power for SaaS valuation than balanced metrics like the Rule of 40.” Caty also underscores the compounding impact of growth: “In a landscape where many SaaS companies fight for market share, growth-driven valuation is crucial, even with economic uncertainty.”

Why it matters:

• The Rule of X balances the need for growth and efficiency, favoring compounding growth over immediate profitability.
• It reflects investor priorities in 2025, where sustainable, scalable growth is rewarded more heavily than cash flow margins.
• This metric serves as a north star for mature SaaS companies aiming to maximize valuation.

How you can improve your Rule of X score in 2025:

1. Iterate on pricing strategies: Regularly test and iterate on your pricing tiers and packaging to align with customer value.
2. Focus on revenue retention and expansion: With new customer acquisition potentially strained, you should double down on keeping the clients you have happy. Strengthen renewals, prevent downgrades, and build expansion via customer success and annual price escalators.

About Caty Rea:

Caty Rea is a Vice President at Bessemer Venture Partners, specializing in enterprise software, AI, and fintech.

Track, monitor, and improve these SaaS metrics with Maxio

The SaaS metrics that will define success in 2025 emphasize a balance between growth, efficiency, and profitability. And if you want to improve these metrics, you need a dedicated tool to track and monitor their performance—which is exactly why we built Maxio.

Maxio empowers SaaS leaders to stay ahead by simplifying the tracking and improvement of critical SaaS metrics.With centralized dashboards, advanced analytics, and automation, Maxio delivers real-time insights that you can use to ensure your SaaS company wins in 2025.

Ready to improve your company’s performance? Get started with Maxio today.