# 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.
• 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.

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