Subscription companies speak a language built around a handful of metrics. Understanding these metrics tells you why companies behave the way they do — and helps you predict what will happen to your subscriptions.
MRR: Monthly Recurring Revenue
MRR is the most important number for any subscription business. It represents stable, predictable monthly income. A SaaS company's valuation is typically 5-12x its annual MRR.
What this means for you: companies with strong MRR growth will reinvest in the product. Companies with declining MRR will raise prices, cut features, or sell to a competitor.
Churn Rate
Churn is the percentage of subscribers who cancel each month. A 5% monthly churn rate means a company loses 5% of subscribers every month — or about 46% per year.
High churn = the company is not delivering value. Watch for signs: price increases, feature degradation, support deterioration. These are often signs of a company trying to compensate for high churn.
ARPU: Average Revenue Per User
Companies constantly optimise to increase ARPU — the average amount each subscriber pays. This is achieved through price increases, removing features from lower tiers, and pushing upgrades.
Pattern to watch: when a service adds a new "Plus" or "Pro" tier, it often signals that existing features will be moved to the higher tier at the next price revision.
CLV: Customer Lifetime Value
CLV estimates how much a customer will pay before cancelling. Companies with high CLV can afford to spend more to acquire customers — hence the generous free trials and discounts.