What is MRR?
MRR, or Monthly Recurring Revenue, is the revenue that a business expects to receive on a regular basis from its subscription-based products or services. It is calculated by multiplying the number of paying customers by the average monthly price of the subscription. For example, if a business has 100 paying customers and the average monthly subscription price is $50, its MRR would be $5,000.
Why is MRR Important?
MRR is important because it indicates the stability and predictability of a business's revenue stream. A high MRR means that the business is generating a consistent and reliable source of revenue from its subscription-based products or services, while a low MRR may indicate that the business is not effectively retaining or acquiring paying customers. In addition, MRR is often used as a benchmark for comparing the performance of a subscription-based business to other businesses in its industry.
How to Increase MRR
There are several ways to increase MRR, including:
• Increasing the number of paying customers by implementing effective marketing and sales strategies
• Increasing the average monthly price of the subscription by offering additional value or features to the customer
• Expanding into new markets or segments that offer higher MRR potential
• Offering additional subscription-based products or services to existing customers
Industry Benchmarks for MRR
The average MRR for a subscription-based business can vary widely depending on the industry and other factors, such as the size of the business and the nature of its products or services. It is important for a business to benchmark its MRR against other businesses in its industry in order to determine if its MRR is in line with industry norms. This can help the business identify opportunities to increase its MRR and improve its stability and predictability of revenue. As an example, the average MRR for a software as a service (SaaS) business is around $10,000 per month.