SAAS ANSWERS

What is MRR?

The simple answer is that MRR is your Monthly Recurring Revenue and one of the key metrics that SaaS companies use to evaluate success. 

BUT LET'S GO DEEPER

MRR is a way to normalize varying packages and terms.

MRR also directly correlates to dollars versus other metrics like users, accounts, or other ambiguous indicators.

Why does revenue need "normalized"?

You probably have multiple package levels or even custom packages.

Accounts may renew annually and monthly.

Accounts may renew on different dates or be prorated.

Accounts are lost - churn; and accounts are won - sales.

You may have upgrades and downgrades at different times.

MRR is frequently used in a number of critical subscription performance reports: Momentum, Customer Lifetime Value (uses MRR in the CLV computations) and MRR Cohort.

SAAS MRR

Some MRR formula examples.

NET MRR

40,100 +

Existing MRR

2,400 +

New MRR

7,900 -

Expansion MRR

1,200 =

Churn MRR

49,200

Net MRR

GROSS MRR CHURN RATE

1,200  / 

Churn MRR

40,100 =

Total MRR At Start Of Month

3% ( .029 )

Gross MRR Churn

GROSS MRR GAIN

(2,400 +

New MRR

7,900 -

Expansion MRR

1,200 )  /

Churn MRR

40,100 =

Existing MRR

25%

Gross MRR Gain

OK, NOW WHAT

Your goal is to reduce volatility of these numbers and ensure their trajectory.

MRR Volatility ( big gains and losses month to month )
can indicate unpredictable marketing, incorrect package terms, high churn and other underlying issues.

Gross MRR Churn Rate should be consistently going down.
Otherwise you need to look at retention strategies.

Gross MRR Gain Rate should be consistently going up.
Otherwise you need to look at marketing strategies and conversion.

SaaS & Tech Marketing

7 Proven Headline Techniques to Boost Engagement in the Tech World

Attention is the most coveted currency. Every pixel, every notification, and every click competes in a relentless battle for a user’s limited attention. Central to this contest is the role of the headline.

SaaS & Tech Marketing

The Great PPC Debate: Does Paid Advertising Spell Boom or Doom for Tech Marketers?

In an industry where acquiring and retaining customers is paramount, SaaS & Tech companies leverage various paid advertising strategies to showcase their solutions and drive user acquisition.

Data & Analytics

Why is Competitive Intelligence so Imperative to SaaS & Tech Companies

Amidst the dynamic landscape of the tech and SaaS industries, competitive intelligence (CI) emerges as a vital force, transforming raw data into strategic insight. In an era where informed decisions are paramount, CI serves as the linchpin for companies, offering a nuanced understanding of their competitive surroundings, ultimately empowering them to navigate the complexities of the evolving market.

Data & Analytics

Why is Competitive Intelligence so Imperative to SaaS & Tech Companies

Amidst the dynamic landscape of the tech and SaaS industries, competitive intelligence (CI) emerges as a vital force, transforming raw data into strategic insight. In an era where informed decisions are paramount, CI serves as the linchpin for companies, offering a nuanced understanding of their competitive surroundings, ultimately empowering them to navigate the complexities of the evolving market.

B2B SaaS

Leveraging a SaaS Agency For Retention Success

Leveraging a SaaS Agency For Retention SuccessBeyond financial advantages, client retention contributes to building a loyal user base that can serve as brand advocates, amplifying positive word-of-mouth and attracting new potential customers organically. This not only bolsters the business’s credibility but also establishes a sense of trust and reliability that sets it apart in the…

SaaS Retention

10 Reasons Your Customers Are Churning

Churn is a death knell for any business. Make sure you aren’t making any of these common reasons your customers are churning.

SOFTWARE + TECHNOLOGY MARKETING E-BOOK

7 Key Marketing Strategies for Technology Companies

Check out our article on marketing for technology companies that explores how to scale your SaaS or Software company with marketing.