Business Metrics & KPIs covers the numbers business owners actually track to know whether the business is healthy and growing. Every metric here answers a specific operational question: how much it costs to win a customer (Customer Acquisition Cost), how much that customer is worth over time (Customer Lifetime Value), how predictable your revenue is month to month (Monthly and Annual Recurring Revenue), whether you're growing faster or slower than you were (month-over-month, year-over-year). The category is written for owners who want a working understanding of what these metrics measure, when they're useful, and where they can mislead you. Each article explains the formula plainly, walks through a worked example with realistic numbers, and flags the most common ways the metric gets misread. We also call out which metrics matter for which business models - a product business and a subscription business shouldn't be tracking the same dashboard. By the end you'll know which KPIs (Key Performance Indicators) to put in front of yourself every week, which ones to revisit quarterly, and which ones the internet talks about that you can safely ignore for your stage. Read alongside Financial Fundamentals if any of the underlying terms (revenue, gross margin, retention) feel new.
Learning Center · Category
Business Metrics & KPIs
The most important metrics used to measure business performance.
Featured
Latest
What Is Customer Lifetime Value (LTV)?
Customer Lifetime Value (LTV) is the total profit you expect from one customer over the full life of the relationship. The other half of the unit economics equation.
May 29, 20267 min read
What Is Monthly Recurring Revenue (MRR)?
Monthly Recurring Revenue (MRR) is the normalized monthly subscription revenue a business can count on. The most important top-line metric for subscription businesses.
May 29, 20267 min read
What Is Annual Recurring Revenue (ARR)?
Annual Recurring Revenue (ARR) is the annualized version of MRR. The standard headline metric for subscription business size and growth.
May 29, 20266 min read
Month-over-Month vs Year-over-Year Growth
Month-over-month (MoM) and year-over-year (YoY) growth measure the same business at different time scales. Each catches things the other misses.
May 29, 20266 min read
Key terms in Business Metrics & KPIs
ARR
ARR: Annual Recurring Revenue. The total subscription revenue a business expects to collect over a normalized year. The headline metric for subscription businesses.
MRR
MRR: Monthly Recurring Revenue. The normalized monthly subscription revenue a business can count on. The foundation of every other subscription metric.
LTV
LTV: Customer Lifetime Value. The total profit a business expects from one customer over the full relationship. Half of the unit economics equation.
Customer Payback Period
Customer Payback Period: how many months of customer gross profit it takes to recover the cost of acquiring that customer. The other half of CAC analysis.
CAC
CAC: Customer Acquisition Cost. The average money spent to win one new customer. Foundational metric for any business spending on growth.
MoM Growth
MoM Growth: Month-over-Month growth. The percentage change from one month to the next. Fast, noisy, useful for operational pace.
YoY Growth
YoY Growth: Year-over-Year growth. Comparison to the same period a year ago. Cancels out seasonality; reflects underlying trend.
Conversion Rate
Conversion Rate: the percentage of visitors, leads, or users who complete a desired action - sign up, buy, subscribe.
Related categories
Frequently asked: Business Metrics & KPIs
What's the difference between a metric and a KPI?
A metric is anything you measure. A KPI (Key Performance Indicator) is a metric you've decided is important enough to drive decisions. A business has many metrics; only a handful should be KPIs.
How many KPIs should I track?
For most small businesses, five to eight is plenty. More than that and nothing is actually "key" anymore.
Which KPIs matter most for a service business?
Revenue per client, gross margin, utilization (billable hours / total hours), and client retention. CAC and LTV matter once you're spending real money on acquisition.
Which KPIs matter most for a subscription business?
Monthly Recurring Revenue, churn, Customer Acquisition Cost, Customer Lifetime Value, and CAC payback period. Growth rate and net revenue retention come next.
How often should I look at my KPIs?
Weekly for operational metrics (sales, pipeline, cash). Monthly for financial KPIs (revenue, margin, expenses). Quarterly for strategic KPIs (LTV, retention, market share).