# Monthly Recurring Revenue

- Canonical URL: https://www.gerhardmerk.de/monthly-recurring-revenue
- Post ID: 603383
- Modified: 2023-07-26T12:36:39+00:00
- Language: en

## Definition

Monthly Recurring Revenue (MRR) is a key financial metric for businesses that operate on a subscription-based model, like Software as a Service (SaaS) companies. It calculates the predictable revenue a company can expect to receive every month. MRR is particularly beneficial because it helps create more accurate forecasts and allows a company to measure growth or decline more precisely. To calculate MRR, you add up the recurring revenue from all customers for one month. For example, if a company has 10 customers who pay $10 per month and 20 customers who pay $20 per month, the MRR would be: MRR = (10 customers * $10) + (20 customers * $20) = $100 + $400 = $500. There are several types of MRR: 1. New MRR: Revenue generated from new customers acquired during a specific month. 2. Expansion MRR: Additional revenue from existing customers through upselling or cross-selling. 3. Churned MRR: Lost revenue from customers who cancelled or downgraded their subscription. 4. Net New MRR: The sum of New and Expansion MRR minus Churned MRR. Understanding these metrics allows businesses to better understand their growth and profitability and make informed business decisions.

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