Monthly Recurring Revenue (MRR) is a metric used by subscription-based businesses. This is used to measure predictable and recurring revenue every month. It helps businesses understand their cash flow and the growth potential of the subscription business model.

Formula to Calculate  MRR:

MRR = Total Number of Subscribers ×(Multiplied )  Average Revenue per User (ARPU)

• Total Number of Subscribers: The number of active subscribers and pay customers in a given month.
• Average Revenue per User (ARPU): Refers to the average amount of revenue generated per user or subscription.

Types of Monthly Recurring Revenue (MRR)

• New MRR: Revenue from new customers acquired in the given month.
• Expansion MRR: Revenue gained from existing customers who upgrade their subscriptions or purchase additional products/services.
• Churned MRR: This is the revenue that is lost because the customers have canceled their subscriptions.
• Net New MRR: The overall change in MRR after accounting for new, expansion, and churned MRR.

MRR is an essential metric for subscription businesses and other recurring revenue models. This metric offers a clear picture of their financial stability and growth.