If you are interested in learning what MRR and ARR means for subscription-based businesses, this is the video for you. I will give you a quick explanation of Monthly Recurring Revenue and Annual Recurring Revenue so you can apply it to your business. Monthly Recurring Revenue: A calculation of your total number of subscribers and the amount they are billed monthly. Subscription-based companies use MRR to determine how much they make in a given month. MRR = Active Customers * Average Monthly Bill Annual Recurring Revenue: A calculation of your total number of subscribers and the amount they are billed yearly. Subscription-based companies use ARR to determine how much they will make in a given year.
ARR = MRR * 12
ARR = Active Customers * Average Annual Bill Net New Monthly Recurring Revenue: Monthly Recurring Revenue with the gain or loss from the previous month. Net New MRR takes into account new customers, upgraded customers, and lost customers to adjust the MRR on a monthly basis.
Net New MRR = New Subscription Revenue + Expanded Subscription Revenue – Lost Subscription Revenue