Monthly Recurring Revenue (MRR)

What is Monthly Recurring Revenue (MRR)?

MRR is an important Key Figure for companies with subscription models. By monitoring and improving MRR, companies can increase profitability, strengthen customer loyalty, and achieve long-term growth.

A high MRR indicates that a company has a stable and predictable income. Companies with a high MRR are usually able to cover their costs, invest in growth, and make profits. As part of Business intelligence and reporting Can the MRR be tracked transparently and sustainably. ‍

Factors influencing MRR

• Number of subscribers: The more subscribers a company has, the higher the MRR.
• Monthly subscription price: The higher the monthly subscription price, the higher the MRR.
• Churn Rate: The churn rate is the rate at which subscribers cancel their contract. A high churn rate can lower MRR.
• Upselling and cross-selling: Upselling and cross-selling are strategies that companies can use to increase revenue per subscriber. This can increase MRR.

Improving MRR

There are several ways to improve MRR, including:

• Acquiring new subscribers: Companies can attract new subscribers by, for example, increasing their marketing, offering new products or services, and making their prices competitive.
• Reduce churn rate: Companies can reduce the churn rate by, for example, providing excellent customer service, improving customer satisfaction, and adding value to their subscribers.
• Upselling and cross-selling: Upselling and cross-selling are effective strategies to increase revenue per subscriber. Companies can offer subscribers upgrades to existing products or services, for example, or offer them additional products or services that are relevant to their needs.
• Pricing: Companies should regularly review their prices and ensure that they are competitive while making a reasonable profit.
• Improving customer experience: A positive customer experience can improve customer satisfaction and customer loyalty, which in turn can result in a lower churn rate and higher MRR.

Calculate MRR

MRR can be calculated in various ways. A common method is the following formula:
MRR = number of subscribers * Monthly subscription price

example:

A company has 1,000 subscribers, each paying €50 per month. The MRR of this company is therefore:

1,000 subscribers * 50€/month = 50,000€

Note: Our team benefited from the support of AI technologies while creating and maintaining this glossary.