What is monthly recurring revenue?
Monthly Recurring Revenue (or MRR) is the value of all active subscription customers. It's a way to normalize all the various pricing plans and intervals (monthly, quarterly, annually, etc.) into a single, easy to digest number.
How is it calculated?
Say you have 10 customers each paying you $10 a month. Here's how you would calculate MRR.
10 Customer x $10/mo. = $100 MRR
Not so bad, hey? It gets complicated however real fast though when things like coupons, upgrades and downgrades come into play.
What about non-monthly plans?
Easy! All non-monthly plans are normalized to monthly. So if a customer is paying you $120 on an annual plan, we add $10 to MRR for the next 12 months. Neat!
What affects my MRR?
If you apply a coupon to a customer, that amount is removed from MRR. So a $10/mo. user with a 50% off lifetime coupon only adds $5 to MRR.
Customers with 100% off coupons are treated as free users. So they won't be included in your metrics. If you add a 100% off coupon to an existing paying customer, this is considered to be user and revenue churn.
Customers who are delinquent for more than 30 days are treated as churned and removed from MRR.
Upgrades and Downgrades
Upgrading to a more expensive plan adds to your MRR, and downgrading reduces it.
Upgrades from a free plan and downgrades to a free plan are treated as a new customer and a cancellation, respectively.
How can I learn more about my MRR?
As one of the most important metrics you can track, Baremetrics provides a ton of ways to dive into your MRR to learn more about your business. Here are some of the great features we have that can be used with MRR–click to learn more about each one!
Compare Plans – See how each plan contributes to your MRR. Check out how a new plan is performing over time.
Compare Date Ranges – Find out how your last 30 days of MRR compares to the same period 6 months ago.
Annotations – Mark important landmarks in your business. Things like new feature releases and marketing and retention campaigns. See how your MRR (and other metrics) change after those big days!
Trend Lines – Take out the bumps in your data and get a clearer idea of how your business is doing. This is especially helpful for looking at your MRR with a long date range.
Benchmarks - See how your MRR stacks up against other businesses that charge about as much per customer as you.