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Monthly Recurring Revenue Calculator
What is monthly recurring revenue (MRR)?
Monthly Recurring Revenue (MRR) is the income that your business generates from its customers every month. It is an essential metric for subscription-based businesses as it helps you assess the stability and growth of your recurring revenue stream and determine the overall financial health of your business.
Relevant channel: Subscription-based businesses, SaaS companies
How to use this monthly recurring revenue calculator
To calculate your MRR, enter your total number of customers and the average revenue per user (ARPU) per month. The tool will instantly calculate your MRR.
Monthly recurring revenue formula
MRR = Total Number of Customers × Average Revenue Per User (Monthly)
Understanding the monthly recurring revenue result
MRR helps you track the health and growth of your business. It must always be tracked over a period of time.
- A steady or increasing MRR indicates a growing customer base or higher customer spending and suggests strong growth or effective pricing strategies.
- A declining MRR suggests customer churn or decreased spending, indicating the need for improved customer acquisition efforts or price adjustments.
When to calculate monthly recurring revenue
You should calculate your MRR:
Every month to track growth trends
When assessing the impact of pricing changes or promotions
To forecast future revenue and make strategic business decisions
When seeking investors or loans to demonstrate the financial health of your company
How to calculate monthly recurring revenue (with example)
Let’s say your business has 500 customers, and your average revenue per user (ARPU) is $50 per month. You can calculate your MRR as follows:
MRR = Total Number of Customers × Average Revenue Per User (Monthly)
MRR = 500 × 50 = $25,000
In this example, your business generates $25,000 in predictable monthly revenue from your current customer base.
How to improve your monthly recurring revenue
Upsell to current customers by offering higher-tier plans or add-ons to increase ARPU.
Reduce churn rate by implementing customer retention strategies to keep customers subscribed.
Invest in marketing campaigns to bring in more subscribers.
Review and adjust your pricing strategy to maximize revenue.
Diversify your offerings to create additional value for customers.
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