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.