MRR — Monthly recurring revenue
MRR is the sum of recurring revenue a subscription business bills each month, normalising annual contracts to their monthly equivalent. It excludes anything that does not repeat — implementations, consulting, one-off charges — because its job is to measure the stable base.
What is monthly recurring revenue?
MRR is the sum of recurring revenue a subscription business bills each month, normalising annual contracts to their monthly equivalent. It excludes anything that does not repeat — implementations, consulting, one-off charges — because its job is to measure the stable base.
Also: MRR
MRR is not billings
A month billings include everything charged, non-repeating items too. MRR includes only the recurring part and spreads annual contracts across twelve. A month with several annual contracts signed has enormous billings and an MRR that rises far less.
Why it matters
What changes in a SaaS
It is the figure everything else is decided against, including whether to hire somebody for support. It is also what puts the cost of support in context: knowing support costs €2,300 a month says nothing; knowing it is 8% or 30% of MRR says everything.
Monthly recurring revenue in detail
How it breaks down
New MRR, expansion, contraction and MRR lost to churn. The four together are the month movement. Looking only at the total hides the fact that you can be growing and losing customers at the same time.
The relationship with support
Support cost divided by MRR is the fastest way to know whether it is proportionate. If that ratio grows month on month, support is scaling with customers rather than with the business, which is exactly what to avoid.
How Intake handles it
Questions about monthly recurring revenue
What is the difference between MRR and ARR?
ARR is MRR times twelve: the same figure expressed annually. ARR is used when most contracts are annual, MRR when billing is monthly.
Does a one-off implementation fee count towards MRR?
No. MRR measures the recurring part only. One-off charges are kept separate precisely because they say nothing about the stable base of the business.
Related terms
A term on its own is only half understood. These come up in the same conversation.
Churn
Churn is the percentage of customers — or of revenue — lost in a period. It is the metric that decides whether a subscription business genuinely grows: with high churn, every new customer only fills the hole left by another.
Onboarding
Onboarding is the process that takes a customer from signing up to getting their first real result with the product. It covers the initial setup, the data import, training the team and everything else needed for usage to become routine.
Contact rate
Contact rate is how many support questions a business generates relative to its size: normally tickets per customer per month, or per hundred active customers. It is the metric that says whether support will scale with the business or suffocate it.
Runway
Runway is how many months a company can keep operating on the money it has, at the current rate of spend. It is calculated by dividing available cash by what gets burned each month, and it is the figure that orders every other decision.
Burn rate — Burn rate
Burn rate is the net money a company consumes each month: everything it spends minus everything it brings in. It is the denominator of runway and, at a company that bills, it is considerably lower than total spend.
PMF — Product-market fit
Product-market fit is the point at which a product solves a problem well enough, for enough people, that growth stops depending on pushing. You recognise it because demand pulls the team along rather than the other way round.
