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metrics

MRR (Monthly Recurring Revenue)

Predictable monthly recurring revenue.

MRR (Monthly Recurring Revenue) is the reference metric for evaluating SaaS health. It represents the predictable revenue you generate each month through active subscriptions. MRR allows you to track growth, forecast future revenue, and calculate company valuation.

Formula

MRR = Number of Active Customers × Average Monthly Price

Basic MRR is calculated by multiplying total active customers by the average monthly subscription price. For accuracy, also calculate Net MRR which includes variations (New MRR, Expansion MRR, Churned MRR).

Concrete Example

A SaaS with 200 customers paying an average of $50/month.

MRR = 200 × $50 = $10,000

MRR is $10,000/month, or $120,000 ARR.

SaaS Benchmarks

< $10KEarly Stage - Focus on product-market fit
$10K - $50KTraction - Ready for seed
$50K - $200KScale - Ready for Series A
> $200KGrowth - Acceleration phase

Tips

  • Track Net MRR (with churn and expansion)
  • +10%/month MRR growth = doubling in 7 months
  • Expansion MRR is more profitable than New MRR
  • Also calculate ARR (MRR × 12) for VC communications

Common Mistakes

  • Including non-recurring revenue (one-time fees)
  • Forgetting to subtract churn
  • Not segmenting by plan/tier

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Related Terms

ARRNRRCHURN RATEARPU

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