What is Monthly Recurring Revenue (MRR)?

Monthly Recurring Revenue (MRR) is a critical metric for subscription-based businesses, particularly in the Software as a Service (SaaS) industry. It represents the predictable and recurring revenue generated by a company’s active subscriptions or customers on a monthly basis. MRR provides valuable insights into a company’s financial health, growth trajectory, and overall business stability. By tracking MRR, businesses can make informed decisions about scaling operations, investing in growth initiatives, and forecasting future revenue.

How to Use the MRR Calculator?

Step 1: Enter the Number of Customers

Begin by inputting the total number of active paying customers or subscribers your business currently has. This should include all customers who are generating recurring revenue for your company.

Step 2: Input the Average Revenue Per User (ARPU)

Calculate and enter your Average Revenue Per User (ARPU). This is the average amount of revenue generated by each customer on a monthly basis. To calculate ARPU, divide your total monthly recurring revenue by the number of customers.

Step 3: Specify the Monthly Churn Rate

Enter your monthly churn rate as a percentage. The churn rate represents the proportion of customers who cancel or do not renew their subscriptions in a given month. If you’re unsure, you can calculate it by dividing the number of customers lost in a month by the total number of customers at the beginning of that month.

Step 4: Click “Calculate MRR”

After entering all the required information, click the “Calculate MRR” button. The calculator will process your inputs and display the results.

Step 5: Analyze the Results

Review the calculated results, which include your Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Monthly Churned Revenue, and Annual Churn Rate. Use these insights to assess your business’s current financial health and growth potential.

By following these steps, you can quickly and accurately calculate your MRR and related metrics, providing valuable insights for strategic decision-making and business planning.