Monthly Recurring Revenue

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A strong MRR is the first step to getting on the right growth track. SaaS companies typically offer two different pricing options: monthly or annual payment plans. Monthly plans usually don’t require a contract—your customers simply pay a monthly fee for using the SaaS Service. Whereas with an annual plan, the customer signs an annual contract and pays a one-time yearly fee.

Monthly recurring revenue is the total revenue accumulated from SaaS subscriptions each month. To calculate MRR metrics, revenue from returning and new customers must be included as well as account upgrades. Next, deduct churned customers (customers who leave your service that month) along with account downgrades.