Monthly Recurring Revenue is the lifeblood metric of SaaS businesses. It provides a normalized view of revenue that accounts for different billing cycles and plan types. MRR is typically broken down into New MRR (from new customers), Expansion MRR (from upgrades), Contraction MRR (from downgrades), and Churned MRR (from cancellations). Net New MRR combines all these components to show overall growth or decline. Investors and operators use MRR trends to forecast revenue, assess growth rates, and make strategic decisions about pricing and product development.
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) - MRR is the total predictable revenue generated from all active subscriptions in a given month, normalized to a monthly figure.
What is Monthly Recurring Revenue (MRR)?
Examples
- 1
A company with 200 customers paying $50/month has an MRR of $10,000.
- 2
An annual plan of $1,200/year contributes $100/month to MRR.
- 3
Net New MRR = $5,000 (new) + $2,000 (expansion) - $500 (contraction) - $1,000 (churned) = $5,500.
Frequently Asked Questions about Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) is the predictable, recurring revenue a subscription business earns each month from active subscriptions.
Monthly Recurring Revenue is the lifeblood metric of SaaS businesses. It provides a normalized view of revenue that accounts for different billing cycles and plan types.
A company with 200 customers paying $50/month has an MRR of $10,000.
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