Monthly recurring revenue (MRR) is the amount of revenue generated from recurring sources during a one month period. MRR showcases one of the biggest advantages of running a SaaS business — steady and predictable revenue generation.
Only looking at recurring revenue and excluding one-time charges will give you a better idea of how much revenue you can plan to generate in future months. It also makes month-to-month comparisons much easier. These comparisons are critical for judging the health and future growth potential of your business.
How to use it:
- Obviously, this is a value that you want to get as high as possible.
- MRR acts as an excellent indicator of the overall health of your company. Compare MRR with previous months to determine the growth of your company.
- MRR is not useful for understanding any particular problems with your business. Metrics like new customers, churn, churn rate, etc., provide much more actionable feedback.
The basics of how we calculate MRR:
All subscription transactions are converted to a monthly amount. A one-year transaction billed at $120 will count $10 towards the MRR total.
We only count revenue generated from subscriptions and their associated add-ons and discounts.
We adjust your company's MRR based on signs ups, reactivations, churn, upgrades, downgrades, etc.