Four Subscription Metrics That Matter
Running a subscription app means tracking the right numbers, not every metric deserves a spot on your dashboard. Here are four high level metrics that will tell you whether your business is working, and if not where you need to focus.
1. MRR - Monthly Recurring Revenue
Make sure you’re measuring the right kind.
MRR should reflect recurring revenue only, not one-time setup fees, not annual prepayments you haven’t properly amortized. If those are mixed in, your MRR number is misleading.
Break it down:
- New MRR - from new customers
- Expansion MRR - upsells, upgrades, seat expansions
- Churned MRR - revenue lost to cancellations
- Contraction MRR - revenue lost to downgrades
Net New MRR = New + Expansion - Churned - Contraction. If this number is flat or negative, your top-line growth is coming from one-time sources, not sustainable recurring revenue.
2. Revenue Churn Rate
More informative than logo churn on its own.
Losing 5% of customers might look fine until you realize those were your highest-value accounts. Revenue churn catches that gap.
Formula: MRR lost in month ÷ MRR at start of month
Good or bad churn depends on your industry. B2B tends to be stickier, so you have the luxury of naturally lower churn. Consumers are more fickle, people cancel more often, and they usually pay less when they stay.
Some apps are seasonal too: Halloween apps in October, fitness apps after New Year. You’ll get a spike, then higher churn in the months that follow. That’s normal, but also a reason to increase your efforts during these periods, as extending the peak season can be better than trying to boost the off season.
But in general for mobile apps hopefully it’s between 6-10%. Under 5% is considered very good.
If you’re above that, fix retention before you pour money into acquisition. No amount of new customer acquisition will outrun that leak.
3. CAC and LTV:CAC Ratio
Know what it actually costs to acquire a customer.
Many teams underestimate CAC by excluding things like marketing tools, content production, founder time, and the cost of customers who churned before paying back their acquisition cost.
LTV:CAC ratio:
- <3:1 - unprofitable
- 3:1 - healthy target
- 5:1+ - strong, though you might be underpricing
Payback period: Months needed to recover CAC. If it’s over 12 months, the unit economics need work.
4. Activation Rate
Signups don’t matter if users never reach value.
Activation is the point where a user parts with their money. This means they believe in your product or have seen that it provides value. This is obviously a very meaningful interaction that speaks to your positioning, marketing and the product itself.
Activation Rate: % of signups that reach that milestone within a defined timeframe (e.g., first 7 days).
Rising signups with flat or declining activation means your funnel needs attention. Though sometimes the trade-off of a lot of new users outweighs if they don’t convert as well.
Track these four metrics consistently, weekly is ideal, and surface them where the team can see them. If any look unhealthy, address those issues before chasing new features or growth channels.