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Financial terms and math don't have to be a mystery



Business Essentials
Breakeven
Gross Margin
Cost Markup
Set Price Using Markup
Return on Investment (ROI)

Sales and Marketing
Convert Leads to Sales

SaaS Metrics
Customer Acquistion Cost (CAC)
Customer Churn
Customer Lifetime Value (LTV)
Monthly Recurring Revenue (MRR)
SaaS Company Viability

What is Monthly Recurring Revenue?



Often referred to simply as MRR, monthly recurring revenue is the amount of total monthly revenue generate from subscriptions.

This does not include one-time setup, onboarding or other non-recurring fees generated from a subscription. This non-recurring revenue should be reported under a separate P&L line item.









How to Calculate Monthly Recurring Revenue



Example

You have 1000 total subscribers. 500 of them have subscribed to the $10 starter plan payable monthly. The other 500 customers have purchased the $300 premier plan billed annually.

(500 x $10) + (500 x $300/12) = $17,500

Simple MMR Formula Cheatsheet



Annual or paid-in-advance subscription payment:

MRR = (Prepaid subscription revenue/number of months) x number of customers)

Monthly subscription payment:

MRR = (Monthly subscription revenue x number of customers)









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