How to calculate MRR
For example, if the monthly average revenue per user is €10 and you have 20 monthly users, your MRR is €200.
MRR = €10 x 20 = €200
To get the annual recurring revenue, simply multiply your MRR by 12.
ARR = €200 x 12 = €2400
This calculation, however, only touches the surface of MRR. As your business grows, your MRR is going to change. In every SaaS business, customers churn or expand their existing pricing plans. That’s why it is important to keep the different types of MRR in mind.
Types of MRR:
• Expansion MRR
• Churned MRR
For better insights, you need to monitor these metrics over time and identify trends. Even though there are benchmarks for a healthy MRR, these standards are only good to get the first indication of growth. It is more important to measure your own numbers and compare them to your companies’ results.
How to improve MRR & ARR
• Reward people to upgrade
• Make upgrading to higher plans easy
• Provide value regularly
• Improve and expand your service