Increasing monthly recurring revenue from expansion or net-new sales is the key to growing a SaaS business.
Disclamer: Be sure all calculations consistently refer to monthly numbers or yearly numbers based on if your sales are monthly or annual contracts.
Calculation
(Previous Month Ending MRR - Current Month Churned MRR) + Current Month Expansion MRR
What is MRR?
MRR stands for monthly recurring revenue. It is all of your recurring revenue normalized into a monthly amount. It is a good way to average of all of your pricing plans and billing periods for a month in a single amount. MRR helps you to track trends over time.
Why is it important?
Recurring revenue in what keeps the doors open to your SaaS business open. MRR is the metric that you will use to calculate recurring revenues and is the primary metric that makes SaaS business is so attractive. If you’re product is good and your customers are finding value in it they will continue to pay you every month.
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