- CAC (Customer Acquisition Cost)
- Total sales and marketing spend over a period, divided by the number of net-new customers acquired in that period. The version we publish on this site is fully-loaded blended CAC, computed from SEC-disclosed S&M expense. See the formula page for the four variants.
- ACV (Annual Contract Value)
- The annualised value of one customer's contract. SMB ACVs are usually under $25k, mid-market $25k-$100k, enterprise $100k+. These ACV bands are how this site segments its benchmark grid.
- ARR (Annual Recurring Revenue)
- The sum of all customers' annualised subscription value - the size metric most SaaS operators track, though it isn't a GAAP line item. This site sorts companies into five funding-stage bands by ARR - Seed under $2M, Series A roughly $1-5M, Series B $5-15M, Growth $15-50M, Late Stage $50M+ - the same bands used on the benchmark grid. They deliberately overlap: funding stage doesn't map cleanly onto ARR, so a company can raise a Series A anywhere in that range. Public SaaS companies report GAAP revenue in their 10-K filings (a close proxy for ARR at steady state); some disclose ARR separately, but it isn't a required filing metric.
- LTV (Lifetime Value)
- The total gross profit one customer is expected to generate over their lifetime. Computed as (average gross margin × average revenue per customer) / churn rate. LTV is sensitive to assumptions about churn and gross margin - small changes compound. We don't publish LTV on this site directly because the inputs require company-specific assumptions, but it appears in the LTV:CAC ratio below.
- LTV:CAC Ratio
- LTV divided by CAC. A ratio above 3:1 is the canonical SaaS rule of thumb for a healthy unit economic. Below 1:1 means you're losing money on every customer. The 3:1 rule was popularised by David Skok and is a starting point - different business models reasonably tolerate different ratios.
- Payback Period
- How many months of gross profit per customer it takes to recoup their CAC. Computed as CAC / (Monthly ARPU × Gross Margin). The 2025-2026 B2B SaaS median is around 15-16 months on this gross-margin-adjusted basis (Optifai's n=939 survey puts it at 15); sub-12 months is exceptional, and Bessemer's target for enterprise/late-stage accounts is under 24 months. Payback is the most-cited efficiency metric in benchmark reports because it doesn't require modelling churn.
- Magic Number
- Net-new ARR in a quarter divided by S&M expense in the prior quarter, annualised. A magic number above 1.0 means each dollar of S&M generates more than a dollar of ARR - efficient growth. Below 0.5 typically signals it's time to slow spending. Coined by Scale Venture Partners.
- NRR (Net Revenue Retention)
- Revenue retained from the existing customer base over a period, including expansion and minus churn. NRR above 100% means existing customers are growing fast enough to offset churn (and then some). Snowflake's NRR has historically been above 120%, which is why their blended CAC overstates their true new-logo CAC - meaningful S&M spend goes into expansion, not just new logos.
- Net New Customers
- End-of-period customer count minus start-of-period customer count. This is the denominator we use on every public-company CAC computation. Critically, it captures churn-and-replace as zero: if you lost 100 and gained 100, net-new is 0 even though you spent on acquiring 100. That's a known limitation of the blended CAC framework.
- S&M (Sales & Marketing Expense)
- The income-statement line that captures salaries, commissions, marketing spend, sales tooling, events, and brand. Disclosed in every public SaaS company's 10-K under the XBRL tag us-gaap:SellingAndMarketingExpense (with one exception in our cohort: Paycom reports only the combined SG&A line). This is the numerator we use for all public-company CAC computations.
- ICP (Ideal Customer Profile)
- The customer segment a company has decided to focus on. ICP fit is the strongest single predictor of CAC - out-of-ICP customers cost more to acquire, convert less, and churn faster. When benchmark reports vary widely on CAC for the same ARR band, ICP-mix variance is usually the explanation.
- MQL / SQL / SAL / SQO
- Marketing-Qualified Lead, Sales-Qualified Lead, Sales-Accepted Lead, Sales-Qualified Opportunity. The standard funnel stages between 'visited the website' and 'signed a contract.' Conversion rates between stages drive CAC: a 10% lift in MQL→SQL halves the CAC if other rates are stable.