Monthly recurring revenue, or MRR for short, is income that a company will receive every thirty days. Typically this income comes in the form of monthly subscription payments.
Measuring monthly recurring revenue is very important, especially when it comes to SaaS companies who rely on recurring subscription as their primary means of income. Focusing on MRR simplifies income calculations and allows a company to know exactly how much money they’re bringing in month to month. An example of this is: Customer A is paying you company $10 a month for your basic service, Customer B is paying $15 a month for the premium version, and Customer C is paying $20 a month for 2 subscriptions to the basic service – making the MRR $45. Let’s say one month, Customers A and C decide to cancel their subscriptions, but Customer B decides to add two new premium subscriptions to their account. Instead of focusing on each individual subscription change it’s easier to focus on the MRR – which in this case is still $45.
{Microdata type="HowTo" id="10015"}Monthly Recurring Revenue (MRR) is the predictable total income a business expects to receive every month from its active subscriptions or contracts.
MRR helps businesses track growth, forecast future earnings, and make informed decisions about budgeting and investments by showing steady monthly income.
To calculate MRR, multiply the average monthly payment per customer by the total number of active subscribers or contracts.
MRR measures monthly recurring income, while ARR (Annual Recurring Revenue) calculates yearly recurring income. ARR is usually MRR multiplied by 12.
Yes, MRR is a useful concept for teaching students about business stability, forecasting, and the value of subscription models in real-world companies.