MRR – Monthly Recurring Revenue
Total fixed monthly revenue from subscriptions. MRR = number of subscribers × ARPU (average revenue per subscriber). A core metric for SaaS and subscription businesses — enables forecasting and planning.
In practice
MRR is the business's 'base salary' — what's guaranteed to come in even without new sales this month. A store with $14,000 MRR can plan expenses, hire staff, and grow, because it knows its baseline.
Common misconception
'MRR is net revenue.' MRR is gross revenue from recurring billing — before churn, refunds, and costs. Net MRR growth = New MRR + Expansion MRR - Churned MRR. Keep the distinction clear.
How to fix it
MRR not growing? (1) Compare New MRR to Churn MRR — if churn is erasing growth, the problem is retention, not acquisition, (2) check the failed-payment rate — expired cards silently 'steal' MRR, (3) add expansion MRR — upsell existing subscribers to higher tiers.
Example
A beauty box store: MRR $10,600, New MRR $2,500/month, Churn $2,350/month. Net: +$150/month — they thought 'we're growing.' In reality, it was a race against time. Fixing dunning emails and onboarding cut churn to $1,150. MRR grew $1,350/month.
Priority
Track four MRR metrics weekly: New, Churned, Expansion, Reactivation. Build a simple dashboard in a spreadsheet or ChartMogul. A drop in New MRR signals a marketing problem. A rise in churned MRR signals a product/experience problem.
Related terms
Keep learning. Metrics that touch the same area:
- ROI – Return on InvestmentFinanceA general profitability metric: (net profit / investment cost) × 100. Different from ROAS — it includes all expenses.
- AOV – Average Order ValueFinanceTotal revenue divided by number of orders. The biggest lever for increasing revenue without more advertising.
- LTV / CLV – Customer Lifetime ValueFinanceTotal expected profit from a customer over the entire relationship. A healthy LTV:CAC ratio is 3:1.
- Gross MarginFinance(Sale price - COGS) / sale price × 100. The basis for every pricing and advertising decision.
- COGS – Cost of Goods SoldFinanceThe direct cost of producing or acquiring products sold. Includes: product + import shipping + customs + packaging.
- Cash FlowFinanceThe movement of cash in the business. 'Profitable on paper, broke in the bank' — a common problem in growing stores.
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