Revenue scales with what customers consume rather than per seat. Net revenue retention runs higher than seat-based SaaS (120–130%+) because expansion is automatic as usage grows — but gross margins carry cloud/compute pass-through, and customer concentration is a real risk. Time-to-first-value, the consumption ramp, gates revenue.
Representative companies
- Snowflake — usage NDR ~158% at IPO
- Datadog — held 130%+ NDR for years
- Twilio — carrier pass-through compresses margin
Primary metrics
The metrics that define health for a usage-based business.
- Gross marginGlobal / FinancialSaaS 70-85%; Mkt 80-90% (net rev); Ecom/DTC 30-50%; Sub 30-50%; Media 35-50%; Usage 50-80% (Twilio ~50%, Snowflake ~75% product); Fin software 80%+ (lending: use NIM); HW 40-60% (Apple ~37%, Cisco ~65%).
- Rule of 40Global / FinancialCloud Index avg ~31%, top-decile ~48%. EBITDA basis: only ~15% clear it; FCF basis ~46%. Margin basis swings result ~16pts - always specify.
- Net revenue retention (NRR / NDR)Global / FinancialPrivate median ~100-106%; top quartile 110-125%+. Usage-based runs higher 120-130%+ (Snowflake 158%->~125%, Datadog >130%->~120%). Weak for low-ARPA consumer; NOT meaningful for marketplaces.
- Customer / revenue concentrationGlobal / FinancialSnowflake/Capital One ~17% (FY19) -> ~11% (FY20) at S-1. No aggregate band - read per filing.
- Net new ARR (gross vs net)Global / FinancialBuilding block for magic number & burn multiple. Track GROSS (new+expansion) and NET separately. ICONIQ: consistent QoQ net-new-ARR velocity is a top PMF signal. No 'good' absolute.
- Consumption ramp / time-to-first-valueActivationNo usage-specific benchmark. SaaS-wide proxy: top-retention first value ~7 days (Totango).
- Logo churn rateRetentionMonthly by ARPA: <$25/mo ~6.1%, >$500/mo ~2.2% (ChartMogul). B2B annual 'good' <5%. Usually exceeds revenue churn up-market.
- Expansion / upsell rateRevenueExpansion ~40% of new ARR, >50% above $50M ARR. Use NRR bands; label expansion-% directional.
Secondary metrics
Omega Point BenchmarksUsage-based