MRR (Monthly Recurring Revenue) is a metric which is very
important to analyse a business model having recurring revenue like
subscription. It helps in understanding how the business is growing and, as the
name suggests, what the actual recurring monthly revenue of the business is.
MRR is calculated by converting all revenues of the business
into a per month basis. All recurring payments are included and non-recurring
payments, tax payments and adhoc charges are not included.
For example,
Recurring Revenue per
month - $10,000 per month
Non - Recurring
Revenue – $2,000
Recurring Annual
Revenue - $60,000 per year = $5,000 per month
Discounts per month -
$3,000 per month
MRR = 10,000 + 5,000 –
3,000 = $12,000