In episode #342 of SaaS Metric School, Ben breaks down the Cost of ARR metric and explains why it’s one of the most practical and revealing go-to-market efficiency metrics for 2026 planning. He covers where the metric originated, how to calculate it correctly, and how to use it to sanity-check forecasts and budgets.

Ben walks through the three variations of Cost of ARR (blended, new, and expansion), explains why bookings data—not revenue—is required, and shows how benchmarking by ACV provides far more insight than aggregate benchmarks.

Resources Mentioned

Benchmarkit.ai for SaaS metrics benchmarks
Cost of ARR framework: https://www.thesaascfo.com/saas-cac-ratio/
SaaS Metrics Course: https://www.thesaasacademy.com/the-saas-metrics-foundation

What You’ll Learn

What the Cost of ARR metric is and why it matters for SaaS and AI companies
The difference between blended, new, and expansion Cost of ARR
Why Cost of ARR must be based on bookings, not revenue
How improper CAC allocation distorts Cost of ARR results
How to use Cost of ARR to validate 2026 forecasts and budgets
Why benchmarking by ACV size is more accurate than company size
What top-quartile Cost of ARR performance looks like across ACV ranges

Why It Matters

Cost of ARR quickly exposes unrealistic bookings forecasts
It connects sales and marketing spend directly to ARR outcomes
The metric helps right-size go-to-market investment for 2026
ACV-based benchmarks prevent misleading efficiency comparisons
Tracking trends over time highlights improving or degrading efficiency
Cost of ARR works across PLG, sales-led, SaaS, and AI models

Where is Your Cost of ARR Trending This Year?

SaaS Metrics School

Where is Your Cost of ARR Trending This Year?