MRR: The most important indicator for SaaS

We recently published an article called ‘Find out what the main SaaS metrics are’, which highlighted the most strategic indices for having a sustainable business in the online universe, among them was MRR. However, Monthly Recurring Revenue is so critical among subscription contract and SaaS companies that it is worth an exclusive post on the subject. This is because it is a vital metric used as a thermometer to measure the financial health of the business, because from the MRR it is possible to calculate the recurring revenue and / or the forecast of earnings for a period (monthly, quarterly, annual), that is, whether or not the company is profitable.

How to calculate the MRR?

It is a very simple calculation that must be analyzed monthly, and can be used as an ally to implement strategies to improve the SaaS product / service, as well as increase business revenue. To know this number, just add the monthly fees of your customers paid for the service provided. Here's an example:

MRR = total amount charged

Let's say you have three types of plans: Basic, Plus, VIP. In the Basic plan you have 300 customers who pay $ 50.00 per month; in Plus 200 that pay $ 100.00 and VIP 50 that pay $ 200.00.

MRR = 300 x 50 + 200 x 100 + 50 x 200

Its predictable monthly revenue is $ 45,000.00.

It is also worth mentioning that it is possible to include other assets in this account to have an average of the MRR, such as new customers, lost users or even cancellations - churn - customer cancellation by percentage - read more in “Churn: what it and how to decrease the turnover of SaaS customers ”.

How to increase the MRR?

The importance of systematic and analytical MRR monitoring is to understand that the cost of winning a new customer is much greater than maintaining the current ones.

There are several customer retention practices, which may include offering a free plan for a period, attracting and presenting your services / products, or bringing different plan options with alternatives that can be customized and adapted according to the company's needs, but without a doubt, the relationship is your greatest asset to keep users always satisfied and engaged.

Create your Changelog

Changelogfy is a complete system that promotes a better user experience with your SaaS product and / or service, as it is a tool that helps to keep communication always active, in a simple and effective way. With the platform, you will be able to update your user on the work of your team, strengthening the relationship and, thus, always keeping you close, an important factor in retaining consumers.

In addition, with each version update and product notes, it is possible to obtain reaction and feedback reports, effective information so that your team has data capable of creating a behavioral map from the customers who most interact with the inactive ones, reducing the turnover of cancellations.

Already have a changelog? Connect with your team and customers quickly and easily. Create your changelog for free now.

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