Monthly Recurring Revenue (MRR) is a financial metric that measures the predictable and recurring income a company receives from its customers on a monthly basis. It is commonly used by subscription-based businesses, such as software companies and online services, to track their financial performance over time.
The formula for Monthly Recurring Revenue is:
MRR = (Number of Customers) x (Average Revenue per Customer per Month)
It is calculated by multiplying the number of customers by the average revenue generated by each customer per month.
For example, if a company has 100 customers and each customer pays an average of $50 per month, the Monthly Recurring Revenue would be $5,000.
MRR is a key metric for subscription-based businesses because it allows them to predict future revenue, plan for growth, and identify areas where they can improve their customer acquisition and retention strategies.
MRR is also used to track the growth of a business over time, by comparing the current MRR to the previous month, quarter, or year. A positive MRR growth rate is a good indicator of a healthy business, while a negative MRR growth rate can be an early warning sign of potential financial trouble.
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