MRR (Monthly Recurring Revenue)

Calculate MRR by multiplying your total number of paying customers by the average revenue per customer per month. If you have annual plans, divide by 12 to normalize. Why MRR matters more than total revenue: A $100k month from one-time sales doesn't tell you if you'll hit $100k next month. A $10k MRR with 20% month-over-month growth tells you exactly where you'll be in 6 months (assuming retention holds). MRR components to track: (1) New MRR—revenue from new customers, (2) Expansion MRR—upsells and upgrades from existing customers, (3) Churned MRR—revenue lost from cancellations, (4) Contraction MRR—downgrades from existing customers. Net New MRR = New + Expansion - Churned - Contraction. Healthy SaaS benchmarks: Early stage (pre-PMF): 15-20% month-over-month MRR growth. Post-PMF growth stage: 10-15% monthly. Mature companies: 5-10% monthly. If you're below 5%, you're not growing fast enough to interest investors. Common mistakes: (1) Including one-time setup fees in MRR (they're not recurring), (2) Not separating new vs. expansion MRR (expansion is a signal of product value), (3) Ignoring churn—growth means nothing if you're leaking revenue as fast as you add it.

If you have 50 customers paying $100/month and 10 customers paying $500/month, your MRR is (50 × $100) + (10 × $500) = $10,000 MRR.