Monthly Recurring Revenue (MRR)
Metric · 2 min read
Monthly recurring revenue (MRR)
Monthly Recurring Revenue (MRR) is a key metric for subscription-based businesses. Here’s everything you need to know: what it is, why it matters, how to calculate it, and how to increase it!
Formula
MRR = Number of Active Customers × Average Revenue Per Customer
Example. If your company has 200 customers paying an average of $50 per month, your MRR is $10,000. This amount reflects your predictable revenue for that month, excluding one-time payments.
What it is
Monthly Recurring Revenue (MRR) is the predictable, recurring income a business earns from subscriptions or ongoing customer payments each month. It gives a clear picture of financial stability and growth potential.
Why it matters
MRR is a cornerstone metric for subscription and SaaS businesses. It helps forecast revenue, monitor business health, and assess how acquisition, retention, and churn impact growth.
How it is calculated
You calculate MRR by multiplying the number of active customers by the average revenue per customer (ARPU). Adjust for upgrades, downgrades, and churn to get a complete picture.
A good value
A good MRR depends on your business model, but consistent month-over-month growth and low churn are strong indicators of a healthy revenue engine.
A bad value
Flat or declining MRR – especially when paired with high churn – can signal poor product-market fit, weak retention, or lack of customer engagement.
Do
Use these strategies to improve MRR and build a more predictable and scalable business model.
- 01
Focus on customer retention
Reduce churn with better onboarding, support, and value delivery to keep customers subscribed longer.
- 02
Upsell and cross-sell
Increase MRR by encouraging customers to upgrade plans or add new features that provide value.
- 03
Offer annual plans with monthly allocation
Convert one-time payments into consistent monthly contributions through pricing and billing strategies.
Avoid
Don’t confuse MRR with total revenue or overestimate its stability. Always account for churn, downgrades, and temporary discounts to maintain accurate forecasts.
Related metrics you might be interested in
Average Revenue per Unit (ARPU)= Total Revenue ÷ Total Units Sold
Churn Rate= (Customers Lost ÷ Customers at Start of Period) × 100
Revenue per Email= Total Revenue from Campaign ÷ Total Emails SentRevenue per Visitor (RPV)= Total Revenue ÷ Total Number of Visitors
Total Sales= Sum of All Completed Purchase Transactions
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