Monthly Recurring Revenue (MRR) Calculator
The key metric for tracking the health of a subscription business.
Your Monthly Recurring Revenue (MRR)
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Understanding Monthly Recurring Revenue
What is MRR?
Monthly Recurring Revenue (MRR) is the predictable revenue that a subscription-based business expects to receive on a monthly basis. It’s a critical metric that normalizes revenue from different subscription terms (monthly, quarterly, annually) into a single, consistent number that can be tracked over time. It is the lifeblood of any SaaS or subscription company.
Why is MRR the Most Important SaaS Metric?
- Predictable Growth: MRR provides a clear, consistent measure of a company’s financial trajectory and growth rate.
- Financial Forecasting: It is the foundation for accurate financial planning, budgeting, and cash flow forecasting.
- Investor Confidence: A steady, growing MRR is the primary indicator of a healthy, scalable business model that investors look for.
- Guides Strategic Decisions: Changes in MRR (New, Expansion, Contraction, Churn) provide actionable insights into what’s working and what isn’t in your product and marketing.
How to Increase Your MRR
- Acquire New Customers: The most straightforward way is to add new paying customers (New MRR).
- Upsell & Cross-sell: Encourage existing customers to upgrade to higher-priced plans or add new features (Expansion MRR).
- Reduce Churn: Minimize the number of customers who cancel their subscriptions (Churn MRR) by improving your product and customer service.
- Optimize Pricing: Regularly review and test your pricing strategy to ensure you are capturing the full value of your service.