Monthly Recurring Revenue

What is monthly recurring revenue?

Monthly Recurring Revenue (or MRR) is the value of all active subscription customers. It's a way to normalize all the various pricing plans and intervals (monthly, quarterly, annually, etc.) into a single, easy to digest number. 

How is it calculated?
If you had 10 customers each paying you $10 a month, here's how you would calculate the MRR.

10 Customer x $10/mo. = $100 MRR

Not so bad, huh? Don't get too comfortable, things can get really complicated, really fast, when things like coupons, upgrades and downgrades come into play. 😩

What about non-monthly plans?
Easy-peasy! All non-monthly plans are normalized to monthly. So if a customer is paying you $120 on an annual plan, we add $10 to MRR for the next 12 months. Neat!

What affects my MRR?

Coupons:
When you apply a coupon to a customer, that amount is removed from MRR. So a $10/mo. user with a 50% off lifetime coupon only adds $5 to MRR.

Customers with 100% off coupons are treated as free users. So they won't be included in your metrics. If you add a 100% off coupon to an existing paying customer, this is considered to be user and revenue churn.

Delinquency:
Customers who are delinquent for more than 30 days are treated as churned and removed from MRR.

Upgrades and Downgrades:
Upgrading to a more expensive plan adds to your MRR, and downgrading reduces it.

*Upgrades from a free plan and downgrades to a free plan are treated as a new customer and a cancellation, respectively.*