Monthly Recurring Revenue is the income a company receives on a regular, monthly basis.
Why use it
This metric is suited best for subscription based business models. Together with metrics that track customer acquisition and churn it gives a good forecast of expected future revenues.
The same metric can also be calculated on an annual basis (Annual Recurring Revenue). This can make sense, for example, when the minimum subscription period is one year.
The Monthly Recurring Revenue is calculated by adding up all recurring revenue streams.
|∑ recurring revenues|
A company gets 50 € revenue each from 200 users and 100 € from 20 premium users per month.
|(50 € x 200) 10.000 €|
|+ (100 € x 20) 2.000 €|