{"id":14,"date":"2021-09-03T11:16:03","date_gmt":"2021-09-03T11:16:03","guid":{"rendered":"https:\/\/estrategybrokers.com\/?p=14"},"modified":"2021-09-03T11:16:04","modified_gmt":"2021-09-03T11:16:04","slug":"what-is-monthly-recurring-revenue","status":"publish","type":"post","link":"https:\/\/estrategybrokers.com\/what-is-monthly-recurring-revenue\/","title":{"rendered":"What is Monthly Recurring Revenue?"},"content":{"rendered":"\n

Monthly recurring revenue is the lifeblood of a SaaS company<\/a>. It’s what makes it possible for startups to grow and mature into long-term success stories.<\/p>\n\n\n\n

What Is MRR?<\/h2>\n\n\n\n

Simply put, it’s the amount of recurring revenue your customers pay you each month.<\/p>\n\n\n\n

Monthly recurring revenue, also abbreviated as MRR, is a metric that tracks and reports how much monthly income your company currently receives on an ongoing basis through recurring payments.<\/p>\n\n\n\n

As long as your MRR keeps climbing, you know you’re doing well, and MRR will continue growing as long as you’re retaining existing customers and recruiting new ones.<\/p>\n\n\n\n

How is MRR Calculated?<\/h2>\n\n\n\n

MRR is a function of the number of your paying customers and their average monthly subscription fee (or annual rate).<\/p>\n\n\n\n

The formula looks like this:<\/p>\n\n\n\n

MRR = Number Of Paying Customers x Average Monthly Fee<\/p>\n\n\n\n

Here’s an example: Say you’re taking in $1,000 each month from 100 customers. That’s $10,000 in recurring revenue. If the amount stays constant ($1,000) but you increase the number of subscribers to 200, your MRR increases to $20,000.<\/p>\n\n\n\n

What is the MRR Target?<\/h2>\n\n\n\n

Do you know how much MRR you need to reach your annual recurring revenue for next year? All you need to know is the number 78.<\/p>\n\n\n\n

To calculate your MMR, all you need to do is subtract last year’s ARR from your target ARR and divide by 78. That number will give you your MRR target for the coming year.<\/p>\n\n\n\n

Let’s look at an example.<\/p>\n\n\n\n

Suppose your ARR goal for next year is $500,000, and this year your ARR was $200,000. You would subtract $200,000 from $500,000 to get $300,000.<\/p>\n\n\n\n

You would then divide $300,000 by 78 and get $3,846, which is your MRR target for the following year to reach your goal of an ARR of $500,000.<\/p>\n\n\n\n

What Should be Included in MRR?<\/h2>\n\n\n\n

You should include the following items in your MRR:<\/p>\n\n\n\n