SaaS Monthly Recurring Revenue (MRR) Calculator

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SaaS Monthly Recurring Revenue (MRR)

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Monthly Recurring Revenue (MRR) is calculated by multiplying the Average Revenue Per Account (ARPA) by the Total Number of Customers. This metric is crucial for measuring the predictable and recurring revenue components of your SaaS business.

How to Calculate Monthly Recurring Revenue (MRR)

To accurately determine your SaaS Monthly Recurring Revenue (MRR), follow these steps:

Calculate your Average Revenue Per Account (ARPA). To determine the ARPA, divide your total monthly revenue by the total number of customers. For example, if your revenue is $50,000 per month from 500 customers, then your ARPA is $100.
Determine your Total Number of Customers. This figure represents all active, paying customers each month. For instance, a small startup may have 50 customers, whereas a larger enterprise might have 10,000 customers.
Calculate your Monthly Recurring Revenue (MRR). Multiply the ARPA from Step 1 by the number of customers from Step 2. For example, an ARPA of $100 with 500 customers results in an MRR of $50,000. An ARPA of $120 with 2,000 customers results in an MRR of $240,000.

Important Note: Ensure that the ARPA and customer count are computed on a monthly basis to maintain the accuracy of the MRR calculation.

SaaS Monthly Recurring Revenue (MRR) = Average Revenue Per Account (ARPA) * Total Number of Customers

Wat is maandelijks terugkerende omzet (MRR)?

Imagine MRR like the monthly membership fees to a service that keep coming in as long as you stay subscribed. In the same manner, a software as a service (SaaS) company collects fees every month from its users. This Monthly Recurring Revenue or MRR represents the steady stream of income a company earns from these subscriptions.

This key metric not only reflects the company’s financial stability but also its capability to grow and expand. By reliably measuring MRR, businesses can understand their financial health and plan effectively for the future.

Predict future revenue with reliable recurring income forecasts.
Guide strategic decisions by allocating resources based on clear MRR data.
Assess business health through financial performance and customer retention insights.

Practical Examples of SaaS Monthly Recurring Revenue (MRR)

Example 1: A SaaS company sells 100 subscriptions at $10 each per month. The Monthly Recurring Revenue (MRR) is calculated by multiplying the total number of subscriptions by the subscription price. Therefore, MRR = 100 x $10 = $1000.
Example 2: If another company offers tiered pricing with 50 users subscribing at $15/month and 75 users at $25/month, the MRR would be (50 x $15) + (75 x $25) = $750 + $1875 = $2625 per month.
Example 3: Consider a business that provides both one-time transaction fees and monthly subscriptions. If they have 200 subscribers at a monthly rate of $20, ignoring one-time fees, the MRR calculation would simply be 200 x $20 = $4000.

Month	New MRR	Churned MRR	Net New MRR	Total MRR	MoM Change	MoM Change (%)
January	$5,000	$500	$4,500	$100,000	–	–
February	$6,000	$800	$5,200	$105,200	$5,200	5.2%
March	$7,000	$700	$6,300	$111,500	$6,300	6.0%

MRR = ARPA * Total Number of Customers = $100,000 * 20 = $2,000,000

Different Ways to Calculate Monthly Recurring Revenue (MRR)

Nieuwe MRR: The revenue obtained from new customers in a month, useful in measuring the effectiveness of the acquisition process.
Uitbreidings-MRR: The revenue generated from existing customers through upgrades or add-ons, measures the effectiveness of upselling.
Contraction MRR: The revenue lost due to churn or downgrades by existing customers, important for identifying customer satisfaction issues.
Net New MRR: The total change in MRR due to the combination of new, expansion, and contraction MRR, provides a total perspective on the growth in revenue.
Total MRR: The total revenue at the end of the month which includes all recurring revenues, gives a clear picture of the predictable revenue.

How to Improve Your SaaS Monthly Recurring Revenue

Track and Analyze Overhead Expenses: Create a business expense report using Excel or another spreadsheet application to pinpoint where you can minimize costs. This might include overhead expenses such as office rent, utility bills, and subscription services.
Reduce Unnecessary Software Subscriptions: Evaluate your current subscriptions and terminate any unused or underutilized SaaS applications to decrease monthly outflows.
Negotiate Better Rates: Contact your service providers to discuss possible savings and better contract terms. This could apply to anything from insurance policies to internet services.