MRR is the total revenue a company expects to receive on a monthly basis from its subscribers. It's a crucial metric for gauging the sustainability and growth of a subscription-based business. Monitoring MRR allows businesses to track their revenue streams, identify trends, and make informed decisions about pricing and customer acquisition strategies.
Use case to calculate MRR :
For an email marketing tool we need to consider the flat fee and the estimated number of emails sent per month. An email marketing tool charges a flat fee of €100 per month for platform access. The tool also charges €0.50 per email sent per month.
Let's assume that businesses subscribe to the tool on a monthly basis.
To make it easier, let’s assume they only have one customer. Estimated number of emails sent by that customer each month: Let's say 10,000 emails.
To calculate the MRR:
- Add the flat fee and the estimated cost of emails: €100 + (10,000 emails x €0.50) = €5,100.
The MRR of this email marketing tool would be €5,100 per month.