What it is: MRR is the sum of the revenue generated from recurring subscriptions or services within a single month. It is a key metric for subscription-based businesses to track their revenue streams.
Why it is important: MRR provides a clear and predictable view of a startup's monthly revenue and helps measure its financial performance. It enables startups to assess the health of their subscription business model, track revenue growth, and make data-driven decisions about pricing, customer acquisition, and customer retention strategies.
Formulas: MRR = (Number of Customers) x (Average Revenue per Customer)
How to use it in the context of startups: Startups that operate on a subscription model can use MRR to understand their monthly revenue generation. By analyzing MRR trends, startups can evaluate the impact of customer acquisition, retention efforts, and pricing changes. MRR can also help forecast future revenue and guide business strategies for sustainable growth.