MRR
MRR stands for Monthly Recurring Revenue, which is the predictable total income a company expects to receive from its active subscriptions every month.
How it works
It is calculated by multiplying the total number of paying customers by the average revenue per user (ARPU) for that month. MRR is a crucial metric for subscription-based SaaS businesses because it provides a clear, standardized view of financial health and predictable growth, helping with forecasting and planning.
Examples
- 1.A project management SaaS tool with 100 customers on a $50/month plan has an MRR of $5,000.
- 2.A streaming service uses MRR to track revenue stability after launching a new annual subscription option, converting the yearly fee into a monthly equivalent.
- 3.A company analyzes a dip in MRR to identify a problem with customer churn in a specific pricing tier.
