MRR is a financial metric that represents the amount of recurring revenue a company generates each month from its subscribers.
MRR is important for SaaS companies, because it helps them understand the financial health of their business and predict future growth. It provides valuable insights into how much money a company is earning from its customer base, how much it’s growing, and how much it’s likely to earn in the future.
MRR is also important because it helps companies plan their cash flow and budget for future expenses. By understanding how much money they are generating each month, they can make informed decisions about how to allocate their resources and invest in their business.
Calculating MRR is relatively straightforward. To get started, you need to first gather the data on the amount of recurring revenue generated each month and the number of customers you have. The formula for MRR is:
MRR = Monthly recurring revenue from new customers + Monthly recurring revenue from existing customers + Changes in MRR from upgrades, downgrades, or churn
It’s important to note that MRR should be calculated consistently each month to accurately track your company’s growth over time.