Monthly recurring revenue (MRR) is a key metric for measuring the performance and growth of subscription-based businesses. MRR is the amount of revenue generated by a business from its existing customers in a given month. It does not include one-time fees, such as setup or installation charges, or variable fees, such as usage-based charges.
MRR is calculated by multiplying the number of customers by the average revenue per customer (ARPC). For example, if a business has 100 customers and each customer pays $150 per month, the MRR is 100 x $150 = $15,000. MRR can also be segmented by different customer groups, such as new customers, existing customers, upgraded customers, downgraded customers, or churned customers.
MRR is useful for tracking the growth and retention of customers over time. It helps to identify trends and patterns in customer behavior, such as acquisition, expansion, contraction, or churn. MRR also helps to forecast future revenue and cash flow, as well as to evaluate the effectiveness of marketing and sales strategies. MRR is often used in conjunction with other metrics, such as customer lifetime value (CLV), customer acquisition cost (CAC), and churn rate.