Monthly Recurring Revenue
Why it’s important
For any SAAS or subscription based business, your Monthly Recurring Revenue is everything. Rather than charging a large, one-off fee, SAAS pricing typically involves making a product or service available for a lower, monthly price. This makes cost less of a burden for individual customers, whilst giving the service-provider a regular Cash stream (less churn) to rely upon for growing their business. This figure – the firm’s MRR – is thus what all SAAS strategy tends to revolve around. Every time a new customer signs up to use your service, you are receiving not just a one-off payment, but Monthly Recurring Revenue, and thus additional Cash Flow. Every time a customer exits you are losing the Cash Flow they contributed. Reporting on MRR, tracking its growth and adopting strategies to promote New MRR and reduce Churn is thus critical in order to grow any SAAS or subscription-based business.