Here are the numbers every subscription business should know

Are you new to subscription?

Are you a cleaning company, bookkeeper, or a web agency who has discovered that the subscription model might be a game-changer for your business? Great choice! More and more industries are realizing the benefits of offering customers subscriptions. It provides a steady income and saves you the constant effort of chasing new clients. But—yes, there’s always a “but”—subscriptions come with a sea of data that you’ll need to manage if you want to grow your business. And yes, it can feel overwhelming. Don’t worry, we’ll take it step by step.’ In this blog post, we’ll dive into some of the key metrics you need to keep an eye on. We’ll cover LTV, churn, MRR, CAC, and a few other acronyms that might sound like they’re from another universe. But trust us—they’re important! Some more than others. We’ll also explore how a tool like Alunta can make your life easier—even if it “just” automates invoicing and bookkeeping.

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LTV – Customer Lifetime Value... No, not literally

LTV: Lifetime Value LTV stands for Lifetime Value, and it’s all about understanding how much a customer is worth to your business over time. The higher your LTV, the better—it likely means your customers stick around and contribute to your revenue for a long time. And that’s exactly what we want because it’s generally cheaper to renew existing customers than to acquire new ones. (Keep in mind that LTV is sometimes referred to as CLV (Customer Lifetime Value)—and there are likely other variations too.)

Why is LTV important?

Imagine you have a customer who subscribes to your service. If you know they’ll stay with you for several years and pay every month, you can better calculate how much you can afford to spend on marketing to acquire a new customer. A high LTV means you can afford to spend more on customer acquisition because the investment pays off over time. It’s that simple. There are countless examples of businesses spending too much on customer types that take far too long to become profitable—or worse, they never contribute positively to the bottom line. This makes it essential to ask:

What is the LTV across your customer base?
Where is the most value to be found?

How do you calculate LTV?

LTV isn’t complicated. You take the amount your customer pays per month and multiply it by how long they stay with you. For example: If a customer pays 500 kroner per month and stays with you for 20 months, their LTV is 10,000 kroner. Not so tricky, right?

The challenge with data

It does get trickier if you don’t have historical data on these metrics. If you’re a new business, you’ll need to make educated guesses, which might not be entirely accurate. However, a business with 10 years of history will have more reliable data to calculate LTV accurately. Whether you’re new or established, knowing your LTV can guide smarter decisions and help you grow sustainably.

Churn – Or... how many customers are leaving you?

You’ll notice that these terms are interconnected—luckily. Now let’s talk about Churn. It might sound like the noise you make when trying to open a stubborn jar of jam, but in the subscription world, it means something entirely different. Churn is the metric that shows how many customers are leaving your business. It’s an essential data point to keep an eye on.

Think of churn like a leaky bathtub

Imagine a bathtub where the faucet represents new customers flowing in. Your churn is the hole in the tub—the number of customers slipping out the other end. Ideally, you want the water level in the tub to rise, meaning the inflow of new customers is greater than the outflow.

Why is churn important?

Getting new customers is great, but if they’re leaving faster than you can say “new customer,” you’ve got a problem. The higher your churn rate, the more customers you’re losing. If that number starts creeping too high, it’s a red flag. It could mean your customers are unhappy with your product, or perhaps your prices are just a little too aggressive.

How can you reduce churn?

The solution to high churn? It’s simple but not necessarily easy: keep your customers happy and satisfied. There’s a wealth of strategies and advice out there for how to do this, but if you know your customers well, you likely already have a good sense of what works. And when in doubt, it never hurts to ask them directly.

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MRR – The fixed income each month

MRR, or Monthly Recurring Revenue, is one of the most revealing metrics when running a subscription-based business. It tells you how much revenue you’re bringing in every month from your subscribers. Think of it as your “I can pay the bills” number—it’s definitely worth keeping an eye on.

See the key figures Alunta provides you!

Why is MRR important?

MRR gives you a clear picture of how stable your business really is. If the number is high and steady, it means you have a consistent, growing, and predictable income each month. It’s like knowing how much money is in your lunchbox—you’re confident you’ll get by. But if your MRR is low or fluctuating wildly, it’s a sign that something needs your attention.

How does Alunta help with MRR?

Alunta makes it easy to keep track of your monthly revenue. The system shows you exactly what you’re earning each month—no more counting on your fingers to calculate it. And since billing is automated, you can rest assured that your income will flow steadily without worrying about late or missed payments. Don’t underestimate the value of being able to see MRR for individual customers. Much like with LTV, knowing your MRR helps you determine how far to go for a specific customer group—or even a single customer. An MRR figure helps you make rational, data-driven decisions.

CAC – How much does it cost you to acquire new customers?

And then there’s CAC – Customer Acquisition Cost. This is the cost of acquiring a new customer. There are countless ways to calculate CAC, and it can be a tricky discipline. Let’s assume it includes expenses like advertising, marketing, sales efforts, maybe a few free samples, and some customer service. If you spend 500 kroner on marketing to acquire one new customer, your CAC is 500 kroner. Calculating the exact contributions from sales or customer service can lead to a rabbit hole of calculations. My recommendation: Keep it simple. Focus on your online marketing expenses and add a reasonable buffer depending on your industry.

Why is CAC important?

If you’re spending more to acquire customers than they’re worth, you’ve got a problem. That’s why you need to compare your CAC to your LTV. Put simply, your acquisition costs should be lower than the revenue customers bring in over time. If you have a low LTV and a high CAC, things can get expensive very quickly.

How to balance CAC and LTV

Ideally, you want customers who stick around and pay well (high LTV) while keeping your acquisition costs low (low CAC). Easier said than done—it’s a long journey with ups and downs to find the right balance between CAC and LTV. Alunta may not help you find cheap customers who pay a lot. But we can relieve you of the administrative burden of billing and bookkeeping, so you can focus on growing your business.

Automatic invoicing and accounting – Let’s be honest, it’s just boring!

Who loves invoicing and bookkeeping? I suspect accountants and bookkeepers, of course. (And if you are one or simply love manual invoicing and bookkeeping, my apologies.) But if you’ve ever spent an entire day trying to balance the books, you probably know what I mean. That’s where Alunta comes to the rescue!

Why automate?

Imagine this: You set up a subscription for a customer. You specify their payment terms and interval, and then Alunta takes care of the rest. This means that when the customer needs to renew, an invoice is automatically sent out and recorded in e-conomic without you lifting a finger. It’s like having a personal assistant ensuring everything runs smoothly.

Benefits of automation:

Less time spent on invoicing (yay!)
Reduced risk of errors in bookkeeping
Always knowing when a customer needs to pay
More time to grow your business and focus on what truly matters

ChartMogul – Data for the big gold medal

Now we’ve talked about Alunta, which helps you manage subscriptions and invoices. But what about diving a bit deeper into the numbers and really getting a grip on your business? This is where ChartMogul can assist you.

How does it help?

ChartMogul is a tool that provides insights into your subscription business. It shows you figures like LTV, churn, and MRR in a clear and understandable way, allowing you to make smart decisions for your business. With both Alunta to automate everything and ChartMogul to give you insights into your business, you have a powerful setup to run your subscription business, keep your customers loyal, and ensure the revenue keeps flowing.

Conclusion: So what now?

If you run a subscription business—or are considering it—there are several metrics and data points you need to keep track of. LTV, churn, MRR, and CAC are among the most important, and they can feel a bit overwhelming at first. But with Alunta to automate invoicing and bookkeeping, and ChartMogul to give you a clear overview, you’re well on your way to mastering your subscription business without working yourself to the bone. So, sit back, automate your processes, and start thinking more strategically about your business. It’ll be both more enjoyable and more profitable—I promise!

What data should you keep an eye on in your subscription business?