1. What is Monthly Recurring Revenue (MRR)?

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 subscribers by the average monthly fee.

2. How Does the Calculator Work?

The calculator uses the MRR formula:

Where:

• \( Subscribers \) — Total number of paying subscribers
• \( Monthly Fee \) — Average monthly subscription fee per subscriber

Explanation: This simple multiplication gives the total predictable revenue generated from subscriptions each month.

3. Importance of MRR Calculation

Details: MRR is crucial for SaaS and subscription businesses to track growth, forecast revenue, measure business health, and make informed decisions about investments, hiring, and expansion.

4. Using the Calculator

Tips: Enter the total number of subscribers and the average monthly subscription fee. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between MRR and ARR?
A: MRR is Monthly Recurring Revenue, while ARR (Annual Recurring Revenue) is simply MRR multiplied by 12, representing the yearly value of all subscriptions.

Q2: Should I include one-time fees in MRR?
A: No, MRR should only include recurring subscription revenue. One-time fees should be tracked separately as they don't represent predictable monthly income.

Q3: How often should I calculate MRR?
A: Most businesses calculate MRR monthly to track growth trends and monitor the health of their subscription business.

Q4: What is a good MRR growth rate?
A: Growth rates vary by industry and business stage, but a healthy SaaS company often aims for 10-20% month-over-month growth in early stages.

Q5: How does churn affect MRR?
A: Customer churn (cancellations) directly reduces MRR, which is why it's important to track both new MRR (from acquisitions) and lost MRR (from churn).