Monthly Recurring Revenue Calculator

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Formula for MRR

MRR = (Existing Revenue)+(New Revenue)+(Expansion Revenue)−(Churn)

  • Existing Revenue: Monthly revenue from existing customers before this month.
  • New Revenue: Revenue added from new customers acquired this month.
  • Expansion Revenue: Additional revenue from existing customers who upgraded this month.
  • Churned: Revenue lost from customers who downgraded or churned this month.

Example Calculation with Numbers:

Let’s use your example to calculate MRR for a SaaS company:

  1. Existing Customers:
    • 150 customers paying $50 each per month.
    • So, Existing MRR = 150 customers × $50/customer = $7,500.
  2. New Customers:
    • 10 new customers at $60 each per month.
    • New MRR = 10 customers × $60/customer = $600.
  3. Upgrades (Expansion MRR):
    • 5 customers upgraded to $70 per month plans (from $50 plans).
    • Expansion MRR = 5 customers × ($70 – $50)/customer = $100.
  4. Downgrades and Churns (Churned MRR):
    • 3 customers downgraded to $40 plans (from $50 plans).
    • 2 customers churned who were paying $50 per month.
    • Churned MRR = 3 customers × ($50 – $40)/customer + 2 customers × $50/customer = $110.
  5. Total MRR Calculation:
    • MRR = $7,500 (Existing) + $600 (New) + $100 (Expansion) – $110 (Churned)
    • MRR = $8,090.

What is MRR?

Monthly Recurring Revenue (MRR) is the total predictable revenue a SaaS company expects to receive every month from its subscription-based customers. It’s a key metric that reflects the monthly income generated from active customer subscriptions.

Why is MRR Important?

MRR is essential for monitoring short-term financial health and operational stability. It helps in tracking growth, managing cash flow, and understanding the impact of customer acquisition and retention strategies on revenue.

How to Improve MRR:

  • Increase Customer Base: Focus on marketing efforts to attract more subscribers.
  • Reduce Churn Rate: Enhance customer service and product value to retain existing customers.
  • Implement Upselling Strategies: Offer premium or additional features to existing customers.

Refine Pricing Model: Ensure your pricing strategy aligns with customer value perception and market trends.