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MRR Formula:
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Monthly Recurring Revenue (MRR) is a key metric for subscription-based businesses that measures the predictable revenue a company can expect to receive every month. It's calculated by multiplying the number of customers by the average revenue per customer.
The calculator uses the MRR formula:
Where:
Explanation: This simple calculation provides a snapshot of your predictable monthly revenue, which is essential for financial planning and business growth tracking.
Details: MRR is crucial for SaaS and subscription businesses to track growth, forecast revenue, measure customer lifetime value, and make informed business decisions. It helps investors understand the health and scalability of a subscription business.
Tips: Enter the total number of customers and the average monthly revenue per customer in Australian Dollars. Both values must be positive numbers for accurate calculation.
Q1: What's the difference between MRR and ARR?
A: MRR (Monthly Recurring Revenue) is multiplied by 12 to get ARR (Annual Recurring Revenue). ARR provides an annualized view of your subscription revenue.
Q2: Should I include one-time payments in MRR?
A: No, MRR should only include predictable, recurring revenue. One-time payments or setup fees should be tracked separately.
Q3: How often should I calculate MRR?
A: Most businesses calculate MRR monthly to track growth trends and monitor business performance regularly.
Q4: What is a good MRR growth rate?
A: Growth rates vary by industry and business stage, but typically 10-20% month-over-month growth is considered strong for early-stage SaaS companies.
Q5: How does churn affect MRR?
A: Customer churn (cancellations) directly reduces MRR. It's important to track net MRR which includes new customers minus churned customers.