About airfocus

Try for free

Monthly Recurring Revenue (MRR)

airfocus eBook All You Need To Know About Product Management
Get our All You Need To Know About Product Management eBook
Read now

What is Monthly Recurring Revenue (MRR)?


Definition of Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is a vital element of any business that relies on a subscription model, and an incredibly important metric to allow subscription businesses to prosper. 

MRR is the revenue that comes in, on a regular basis, from customers subscribing to your product. It offers a regular, reliable revenue stream that removes the need to chase new sales with the same customers time after time. 

Rather than concentrating on sales, having a solid understanding of your business’s MRR allows you to devote time and energy to important elements like retaining existing customers.

What are the benefits of Monthly Recurring Revenue?

It costs a lot more money to acquire a new customer than to retain a loyal one.

In fact, some studies suggest acquisition costs can come out as much as 5 times higher.

That’s why MRR makes subscription, and SaaS, organizations such as appealing business models. 

abstract/prioritize emoji

Get our Mastering Prioritization eBook

Learn how to prioritize by making it a simple process, to build products that stand out. Learn more about how to source insight, choose the right prioritization framework and much more.

Get the eBook

Not only does Monthly Recurring Revenue afford greater peace of mind — with reliable, on-going income — it also empowers a business to make more informed decisions around other business costs. If you know you have a solid product, with a loyal returning customer base, you can rely on guaranteed returns.

How do you calculate Monthly Recurring Revenue?

At a high level, calculating MRR is pretty simple. All you need to do is multiply the number of customers you have signed up by the average billed amount. 

As your business grows, you will also need to keep track of the changes in your MRR — or ‘churn’ — by subdividing your MRR into new revenue from new customers, upgraded revenue from existing customers, and lost MRR from downgraded or canceled accounts. 

Having a solid understanding of these metrics allows you to decide whether you need to grow your MRR, and where to focus resources.

What is Monthly Recurring Revenue (MRR)

General FAQ

How to calculate monthly recurring revenue?
To calculate monthly recurring revenue, just multiply the number of customers you sign up by the average billed amount.
Why is monthly recurring revenue important for our business?
MRR relieves some of the pressure to keep generating new leads and converting new customers. It’s a regular, guaranteed income and shows you have a solid product or service that satisfies customer wants and needs.
What is the average recurring revenue?
Average recurring revenue is the average amount of money generated per user. Just multiply the total number of customers by the average amount paid by those customers monthly.

Building better products
starts here

Join thousands of product managers and makers who already enjoy our newsletter. Get free tips and resources delivered directly to your inbox.
airfocus coin
Top rated
on major review platforms
g2 badge users love us
g2 badge leader summer
GetApp badge category leader
software advice badge
capterra shortlist badge
proddy badge roadmapping
crozdesk badge
All rights reserved.