Tuesday, March 28, 2023

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is a metric used by businesses that offer subscription-based services to measure the total amount of revenue they generate from their recurring monthly subscriptions. It's a way to track the predictable revenue stream that comes from subscription-based business models.

To calculate MRR, you take the total number of customers you have and multiply it by the monthly subscription fee for each customer.

For example, let's say a software company has 100 customers, each paying $50 per month for the service. Their MRR would be $5,000 (100 customers x $50 per month).

MRR is an important metric for subscription-based businesses because it provides a more predictable and stable revenue stream than one-time purchases or variable sales. It can also help businesses to forecast revenue and make decisions about growth and investment. By tracking changes in MRR over time, businesses can gain insights into their customer acquisition and retention strategies and identify areas for improvement.

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