Understanding MRR of a Startup

MRR (Monthly Recurring Revenue) is a metric which is very important to analyse a business model having recurring revenue like subscription. It helps in understanding how the business is growing and, as the name suggests, what the actual recurring monthly revenue of the business is.

MRR is calculated by converting all revenues of the business into a per month basis. All recurring payments are included and non-recurring payments, tax payments and adhoc charges are not included.

For example,

Recurring Revenue per month — $10,000 per month

Non — Recurring Revenue — $2,000

Recurring Annual Revenue — $60,000 per year = $5,000 per month

Discounts per month — $3,000 per month

MRR = 10,000 + 5,000–3,000 = $12,000