If you work for a SaaS company, you know exactly how important these metrics are. They give you a short and easy overview of the startup stage, financial status and dynamics.
The economy of most SaaS companies is based on regular payments from their users – subscriptions.
What is MRR – Monthly Recurring Revenue?
This one is easy – imagine you have 1000 subscribers, each pays €10 month. Yes, you guessed it – your MRR is exactly 1000 x €10 = €10 000.
And what if users make payments for the whole year €120? Just divide the payment by 12 and you will get the monthly revenue €10.
Companies usually offers several different plans. Here is an example with three plans:
|Plan||Monthly price||Number of customers||Total revenue|
|Basic||€5||2 000||€10 000|
|Standard||€10||1 000||€10 000|
|MRR||€ 30 000|
In this case, the company has the MRR = 30 000 EUR.
What is ARR – Annual Recurring Revenue?