Monthly Recurring Revenue (MRR) Calculator

MRR (Monthly Recurring Revenue) and ARR (Annual Recurring Revenue) are closely related metrics. MRR measures your predictable revenue stream on a monthly basis, while ARR provides an annualized view. To convert MRR to ARR, simply multiply MRR by 12. For example, if your MRR is $10,000, your ARR would be $120,000.

ARPU (Average Revenue per User) is calculated by dividing your total revenue by the number of users or customers. For MRR calculations, you'd typically use monthly revenue. For example, if your monthly revenue is $50,000 and you have 500 customers, your ARPU would be $100 ($50,000 / 500).

Generally, one-time fees should not be included in MRR calculations. MRR should only include predictable, recurring revenue streams. One-time fees, such as setup fees or professional services, are typically excluded as they don't represent ongoing, predictable revenue.

To increase your MRR, consider these strategies:

• Acquire new customers to increase your customer base
• Reduce churn by improving customer retention (use our Customer Retention Rate Calculator)
• Implement upselling and cross-selling to increase ARPU
• Offer pricing tiers to capture different customer segments
• Introduce annual plans with a discount to secure longer-term commitments

MRR is a crucial metric for valuing subscription-based businesses. Investors often use a multiple of MRR or ARR to estimate a company's value. The specific multiple can vary based on factors like growth rate, churn rate, and market conditions. Generally, higher and more stable MRR leads to higher valuations.

MRR focuses specifically on the predictable, recurring portion of your revenue from subscriptions. It doesn't include one-time purchases, fees, or any non-recurring revenue. Total revenue, on the other hand, includes all income streams, both recurring and non-recurring. For subscription businesses, MRR provides a clearer picture of sustainable, long-term business health.

MRR is closely tied to several other important business metrics:

• Customer Lifetime Value (CLV): Higher MRR often correlates with higher CLV. Calculate your CLV using our CLV Calculator.
• Customer Acquisition Cost (CAC): MRR helps determine how quickly you can recover your CAC. Use our CAC Calculator to compare.
• Churn Rate: MRR lost to churned customers is a critical metric. Track this alongside your Customer Retention Rate.
• Growth Rate: Month-over-month changes in MRR are a key indicator of business growth.