What is MRR and ARR? Monthly Recurring Revenue & Annual Recurring Revenue Explained For Beginners
- October 21, 2022
- Surfside PPC
If you are interested in learning what MRR and ARR means for subscription-based businesses, this is the video for you. I will give you a quick explanation of Monthly Recurring Revenue and Annual Recurring Revenue so you can apply it to your business.
Monthly Recurring Revenue:
A calculation of your total number of subscribers and the amount they are billed monthly. Subscription-based companies use MRR to determine how much they make in a given month.
MRR = Active Customers * Average Monthly Bill
Annual Recurring Revenue:
A calculation of your total number of subscribers and the amount they are billed yearly. Subscription-based companies use ARR to determine how much they will make in a given year.
ARR = MRR * 12
ARR = Active Customers * Average Annual Bill
Net New Monthly Recurring Revenue:
Monthly Recurring Revenue with the gain or loss from the previous month. Net New MRR takes into account new customers, upgraded customers, and lost customers to adjust the MRR on a monthly basis.
Net New MRR =
New Subscription Revenue +
Expanded Subscription Revenue –
Lost Subscription Revenue
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