MRR: essence, calculation formula, ways to increase
Posted: Sun Jan 19, 2025 3:42 am
What is it? MRR is a metric that shows the regular monthly amount of revenue from a user. It is used in SaaS businesses – companies that focus on selling subscription services.
How to calculate? MRR allows you to build financial forecasts, plan, attract new clients, and build strategies for retaining old ones. The calculation formula is simple, but additional influencing factors must be taken into account.
The article explains:
What is the MMR metric
What does MRR calculation give to a business?
MRR calculation formula
Types of MRR
B2B SaaS ARR, MRR and chinese malaysia phone number list CARR Benchmarks
5 Common Mistakes Made When Calculating MRR
How to increase MRR
Strategies to Increase ARR and CARR
Frequently asked questions about MRR
5 Scenarios for Using Neural Networks to Increase Website Conversion by 40%
Download for free
What is the MRR metric?
Monthly Recurring Revenue in English means "regular monthly income". This indicator is one of the key ones for projects where the product is purchased by subscription. This is typical, for example, for software.
Regular monthly income includes:
Subscriptions to online services, cloud storage, paid forums, call research, MRR integration with analytics.
Implementation of software products, the use of which is paid for for a certain period.
Sale of Internet services, mobile communications and the like.
Subscription fees enable a company to receive stable periodic income without attracting new customers. MRR gives an idea of the profit of an enterprise operating under the corresponding model.
MRR
Source: shutterstock.com
Typically, customers pay a fixed monthly amount, which simplifies revenue planning and development strategy. MRR should increase over time. If it remains unchanged or, worse, starts to fall, this indicates problems in the business.
The main feature of the MRR formula is the consideration of regular payments. For example, our transaction for the sale of "Revenue" is one-time, in which the product is paid for once at a certain cost. Monthly Recurring Revenue still allows you to receive contributions from the client on a regular basis. The buyer acquires the right to use the product for a limited period.
Moreover, if the service is not provided immediately, but is spread over a long period of time, then even if the entire amount is paid in full, it must be divided into several payments, taking into account the corresponding period for the purposes of calculating MRR.
Evaluating the daily subscription structure allows you to correctly calculate refunds, upgrades or downgrades of plans.
Read also!
"How to Calculate Conversion: 3 Proven Options"
Read more
The most accessible method for calculating MRR is to calculate the product between the average monthly revenue per customer (ARPU) and their total number.
This metric determines:
Assessment of the economic nature of the business.
Growth strategy and planning of expected income.
Business sustainability assessment.
In the SaaS model, revenues are relatively stable. This allows you to form accurate forecasts of the financial state of the company after a certain period and, on this basis, plan development strategies, marketing, personnel costs, and operating expenses.
For sponsors, this metric also provides an opportunity to understand whether Market Fit has been found, whether success is scalable, or whether achievements are limited to good sales.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
The Secret ROI Formula: Instant Advertising Efficiency Calculator
Anti-crisis Solutions Matrix: Find the Perfect Strategy for Your Business in 15 Minutes
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
153324
What does MRR calculation give to a business?
It helps you estimate your expected monthly profit. Leading SaaS companies use this metric
How to calculate? MRR allows you to build financial forecasts, plan, attract new clients, and build strategies for retaining old ones. The calculation formula is simple, but additional influencing factors must be taken into account.
The article explains:
What is the MMR metric
What does MRR calculation give to a business?
MRR calculation formula
Types of MRR
B2B SaaS ARR, MRR and chinese malaysia phone number list CARR Benchmarks
5 Common Mistakes Made When Calculating MRR
How to increase MRR
Strategies to Increase ARR and CARR
Frequently asked questions about MRR
5 Scenarios for Using Neural Networks to Increase Website Conversion by 40%
Download for free
What is the MRR metric?
Monthly Recurring Revenue in English means "regular monthly income". This indicator is one of the key ones for projects where the product is purchased by subscription. This is typical, for example, for software.
Regular monthly income includes:
Subscriptions to online services, cloud storage, paid forums, call research, MRR integration with analytics.
Implementation of software products, the use of which is paid for for a certain period.
Sale of Internet services, mobile communications and the like.
Subscription fees enable a company to receive stable periodic income without attracting new customers. MRR gives an idea of the profit of an enterprise operating under the corresponding model.
MRR
Source: shutterstock.com
Typically, customers pay a fixed monthly amount, which simplifies revenue planning and development strategy. MRR should increase over time. If it remains unchanged or, worse, starts to fall, this indicates problems in the business.
The main feature of the MRR formula is the consideration of regular payments. For example, our transaction for the sale of "Revenue" is one-time, in which the product is paid for once at a certain cost. Monthly Recurring Revenue still allows you to receive contributions from the client on a regular basis. The buyer acquires the right to use the product for a limited period.
Moreover, if the service is not provided immediately, but is spread over a long period of time, then even if the entire amount is paid in full, it must be divided into several payments, taking into account the corresponding period for the purposes of calculating MRR.
Evaluating the daily subscription structure allows you to correctly calculate refunds, upgrades or downgrades of plans.
Read also!
"How to Calculate Conversion: 3 Proven Options"
Read more
The most accessible method for calculating MRR is to calculate the product between the average monthly revenue per customer (ARPU) and their total number.
This metric determines:
Assessment of the economic nature of the business.
Growth strategy and planning of expected income.
Business sustainability assessment.
In the SaaS model, revenues are relatively stable. This allows you to form accurate forecasts of the financial state of the company after a certain period and, on this basis, plan development strategies, marketing, personnel costs, and operating expenses.
For sponsors, this metric also provides an opportunity to understand whether Market Fit has been found, whether success is scalable, or whether achievements are limited to good sales.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
The Secret ROI Formula: Instant Advertising Efficiency Calculator
Anti-crisis Solutions Matrix: Find the Perfect Strategy for Your Business in 15 Minutes
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
153324
What does MRR calculation give to a business?
It helps you estimate your expected monthly profit. Leading SaaS companies use this metric