In this episode of The Metrics Brothers, Ray “Growth” Rike and Dave “CAC” Kellogg take on one of the biggest challenges facing modern SaaS and AI-Native companies: how to measure NRR and expansion when pricing isn’t fixed anymore.
With the rise of usage-based, user-based-but-variable, and outcome-based pricing, the traditional world of ARR - long the backbone of SaaS metrics has been turned on its head. Contracts no longer tell the story. Spend does.
Dave breaks down how to rethink ARR proxies using quarterly or monthly revenue (“implied ARR”) and why longer intervals help smooth volatility, especially for “humpback” or highly seasonal customers whose spend fluctuates dramatically month-to-month.
Ray digs into what NRR was originally designed to measure and why many teams misinterpret it—especially in variable-pricing environments where a backward-looking metric can’t serve as a forward-looking forecast. The brothers explain why sequential expansion, usage behavior, and real spend patterns now matter far more than traditional ARR bridges.
Key topics include:
- Why ARR no longer maps cleanly to revenue in a variable pricing world
- How to calculate implied ARR using quarterly or monthly software revenue
- Why NRR must be interpreted differently—and why survivor bias still matters
- How volatility and seasonality distort short-interval metrics
- Why usage is the real leading indicator, not invoices
- How to rethink “expansion ARR” when base + variable spend changes continuously
Packed with examples, including sinusoidal customers, misleading GRR math, and the dangers of splitting base versus variable revenue, this episode gives operators and investors a practical framework for measuring customer growth when pricing is anything but predictable.
A must-listen for CFOs, RevOps leaders, and anyone trying to modernize SaaS metrics for the AI era.
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