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