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Mathematically, the SaaS MRR churn rate is an extension of the SaaS customer churn rate calculated by substituting monthly recurring revenue in place of the number of customers. The simple answer to this question is money. SaaS customer churn rate is important, particularly if you run a B2C SaaS business where revenue is generated by monetizing users through advertising or such.
However, B2B SaaS companies generate revenue from direct subscription sales. The slightly more complex answer is that MRR metrics tell you if SaaS customer churn is leaning more toward larger customers or smaller customers. IN addition MRR metrics highlight two very important SaaS revenue drivers that customer metrics do not: upgrades and downgrades.
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Monthly Recurring Revenue, or MRR, is the measure of money expressed as a dollar amount that is paid monthly for a subscription for a product or service. MRR normalizes for different subscription terms which gives subscription businesses a clearer view of their businesses. MRR is an important subscription economy metric that represents predictable monthly revenue. As such, it provides valuable insight into sales and cash flow dynamics. Calculating MRR for a term subscription.
Calculating MRR for a monthly subscription. With a monthly subscription, your subscribers are actually billed on a monthly basis. So you can just pull actual monthly subscription fees to arrive at MRR. Changes to terms over a contract term or subscription lifetime will naturally change the MRR. Contracted MRR.
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We track several KPIs as they progress over the course of the month. In this post, we are going to look at monthly recurring revenue MRR historically across the year, and segment each month by its progress up to the current date.