MRR (Monthly Recurring Revenue)
The predictable revenue your SaaS earns every month from active subscriptions.
What it means
Monthly Recurring Revenue is the lifeblood metric of any subscription business. It normalizes all your recurring charges into a single monthly number, regardless of whether customers pay monthly, quarterly, or annually. MRR gives you a clear, comparable snapshot of your revenue engine's health and is the foundation for forecasting growth, setting hiring budgets, and raising funding.
Formula
MRR = Sum of all active monthly subscription amounts
Why it matters
Investors, advisors, and your own planning all revolve around MRR. A growing MRR means your acquisition outpaces churn, your pricing works, and your product delivers enough value for people to keep paying. Tracking MRR month-over-month is the simplest way to know if your business is heading in the right direction.
What is MRR?
MRR stands for Monthly Recurring Revenue. It's the total predictable revenue your SaaS business earns from subscriptions each month, normalized to a monthly figure regardless of billing cycle.
How do you calculate MRR?
Add up all active subscription amounts, converted to their monthly equivalent. A customer paying $1,200/year counts as $100/month MRR.
What is the difference between MRR and ARR?
MRR is the monthly figure; ARR (Annual Recurring Revenue) is simply MRR × 12. ARR is more common when talking to investors, while MRR is better for month-to-month operational decisions.
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