Stripe MRR (excl. Canceled Subscriptions)

What Is Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) metric is the predictable and recurring revenue that a business generates on a monthly basis.
It’s used primarily by businesses that operate on a subscription-based model, and it provides key insights into revenue trends, customer retention, stability, and overall business performance.

How to Calculate Monthly Recurring Revenue (MRR)

To calculate your MRR, you need to sum up the monthly revenue your business generates from active subscriptions.

In the broadest sense, the formula is basically:

MRR = Total Revenue from Active Subscriptions in a Month

To get even more granular, you need to consider your specific type of subscription-based business model.

For example, let’s say you’re a SaaS company that implements a tiered pricing system and offers three subscription plans:

• Basic plan: $10 per month, with 100 active subscribers
• Standard plan: $20 per month, with 150 active subscribers
• Premium plan: $30 per month, with 75 active subscribers

To calculate MRR for this month, you would multiply the number of subscribers in each plan by their corresponding monthly price and then sum up the results.

MRR = (Basic plan revenue) + (Standard plan revenue) + (Premium plan revenue)

Following this formula, we find that the MRR for the month is $6,250.

What Is a Good Monthly Recurring Revenue (MRR) Growth Rate

There are several factors that determine a business’s MRR growth rate, such as industry, specific pricing model, and market conditions. Because of this, there is no universally good benchmark.

However, we can take a look at some general numbers related to the stage of your SaaS company:

• Early-stage startups: Startups often experience high growth rates, sometimes even in triple digits (100%+). This rapid growth is expected as they’re acquiring initial customers and establishing a foothold in the market.
• Growing businesses: As a business matures and expands its customer base, a healthy growth rate may range between 20% to 80% annually. This implies substantial progress and demonstrates the ability to scale operations.
• Established companies: Established companies with a larger customer base and a mature market may aim for a growth rate of 10% to 30% annually. These businesses focus on sustaining steady growth while maximizing profitability.

If you’re currently seeing lower numbers in your own business, it doesn’t necessarily mean that your performance isn’t good. Make sure to consider all factors.
Aiming for consistent, healthy growth is key and it’s how you ensure that the business remains financially stable.

How to Increase Monthly Recurring Revenue (MRR)

To consistently increase your business’s monthly recurring revenue, you need to stay on top of new strategies and constantly test different approaches.
But after a while, finding fresh strategies that can move the needle only gets harder.

That’s why we compiled a few methods based on our surveys with hundreds of leading industry experts that you can try out:

• Experiment with a self-liquidating funnel model: If your initial step is to offer a free product, it might be worth testing a self-liquidating funnel model and introducing a low-cost product as the first step instead. This way, prospects will value the initial offering and it makes them more likely to upgrade their plan after they’ve already paid a certain amount to your brand. Plus, it’s a “quick win” when they’re able to solve issues with an inexpensive product.
• Upsell customers on the features they actually want: Collecting customer feedback on what you’re already offering is great, but don’t forget to ask them what they want to see added to your product as well. While you probably won’t add every single feature they mention, you can prioritize the ones that are mentioned the most. And if those features are more than just a simple add-on, you can find ways to upsell the customer on a new subscription if they want to add them.
• If you lack clear data, use a “common sense” approach: In some situations, you’ll simply have to rely on your common sense and make decisions based on your understanding of customer behavior. You won’t always have sufficient data to back up your decisions, but if you understand what your prospects want, you can optimize your offers regardless.

More resources to help you improve:

• 8 Proven Strategies for Converting Free Trial Users to Paying Customers
• How 20+ Freemium SaaS Companies Increased Signup-to-Customer Conversion Rate
• How ProfitWell Grew Revenue per Customer by 400 Percent in 12 Months
• Increasing Free Trial to Customer Conversion to 70 Percent (w/ CallRail)
• Increasing Monthly Recurring Revenue (MRR) by 10x
• Monthly Recurring Revenue: 11 Tips for Improving Your MRR for Better Business Growth
• How One Marketing Agency Improved Recurring Revenue by 20 Percent by Reporting Video ROI with Databox