MRR (Monthly Recurring Revenue) in SaaS

Introduction to MRR in SaaS

If you run a SaaS business, understanding your Monthly Recurring Revenue (MRR) is key to success. MRR shows the predictable income you can expect every month from your customers. It helps you plan, grow, and make smart decisions.

In this article, you will learn what MRR means, how to calculate it, and why it is so important. We will also explore ways to increase your MRR using real examples from popular no-code and low-code tools.

What is MRR and Why Does It Matter?

MRR stands for Monthly Recurring Revenue. It is the total predictable revenue your SaaS business earns each month from subscriptions. Unlike one-time sales, MRR focuses on steady income that repeats every month.

MRR matters because it gives you a clear picture of your business health. It helps you:

• Forecast future revenue and growth
• Measure customer retention and churn
• Make informed decisions about marketing and product development
• Attract investors by showing stable income

For example, if you have 100 customers paying $50 monthly, your MRR is $5,000. This steady income allows you to plan expenses and investments confidently.

How to Calculate MRR Accurately

Calculating MRR is simple but requires attention to detail. The basic formula is:

MRR = Number of Customers × Average Revenue per User (ARPU)

However, SaaS businesses often have different subscription plans and upgrades. To calculate MRR accurately, consider:

• New MRR: Revenue from new customers this month
• Expansion MRR: Additional revenue from existing customers upgrading plans
• Churned MRR: Revenue lost from customers canceling or downgrading
• Net New MRR: New MRR + Expansion MRR - Churned MRR

For example, if you start with $10,000 MRR, gain $2,000 from new customers, $500 from upgrades, and lose $1,000 from churn, your new MRR is $11,500.

Types of MRR and Their Importance

Understanding different MRR types helps you analyze your revenue streams better. The main types include:

• New MRR: Income from brand-new customers
• Expansion MRR: Extra revenue from existing customers upgrading
• Churned MRR: Lost revenue from cancellations or downgrades
• Reactivation MRR: Revenue from customers who return after canceling

Tracking these helps you spot growth opportunities and risks. For example, if churned MRR is high, you may need to improve customer support or product features.

How No-Code and Low-Code Tools Help Manage MRR

No-code and low-code platforms make tracking and growing MRR easier. Tools like Bubble, Glide, and FlutterFlow let you build custom dashboards without coding. Automation platforms like Make and Zapier connect your billing and CRM systems to update MRR data in real time.

Here are ways these tools help:

• Automate MRR calculations: Connect payment gateways to spreadsheets or dashboards
• Visualize revenue trends: Create charts to monitor MRR growth or decline
• Send alerts: Notify your team when churn spikes or new customers sign up
• Integrate customer data: Combine usage and billing info to understand customer value

For example, a SaaS founder used Zapier to link Stripe payments with Google Sheets, automatically updating MRR daily. This saved hours of manual work and improved decision-making.

Strategies to Grow Your MRR

Growing MRR is essential for SaaS success. Here are proven strategies you can apply:

• Offer tiered pricing: Provide plans for different customer needs and budgets
• Upsell and cross-sell: Encourage customers to upgrade or buy add-ons
• Reduce churn: Improve onboarding, support, and product value
• Expand customer base: Use targeted marketing and partnerships
• Introduce annual plans: Offer discounts for yearly subscriptions to boost cash flow

For instance, a SaaS company using Glide added a premium plan with extra features. This increased expansion MRR by 25% within three months.

Common MRR Mistakes to Avoid

Many SaaS businesses make errors that distort MRR insights. Avoid these common mistakes:

• Counting one-time fees: Only recurring revenue counts toward MRR
• Ignoring churn: Not tracking lost revenue hides growth problems
• Mixing currencies: Convert all revenue to a single currency for accuracy
• Overlooking discounts: Calculate MRR after applying discounts or promotions

By avoiding these, you get a clearer picture of your true recurring revenue and can plan better.

Conclusion

Monthly Recurring Revenue is the heartbeat of any SaaS business. It shows how much predictable income you have each month and helps you make smart decisions. By understanding MRR types and calculating it correctly, you can track your growth and spot issues early.

Using no-code and low-code tools, you can automate MRR tracking and focus on strategies to grow it. Remember to avoid common mistakes and always keep your customers’ needs in mind. With steady MRR growth, your SaaS business can thrive and scale confidently.