The monthly recurring revenue graph (abbreviated as MRR) is used to assess the size and growth of the subscriber base and, consequently, the volume of business. It is similar to the revenue graph, but provides a more linear version of revenue allowing expensive long-term subscriptions to be harmonized with lower priced subscriptions of shorter duration.
By definition, MRR operates on a monthly basis, and in order to include revenues from subscriptions of different lengths, the normalization process is used: for example, if an annual subscription produces a revenue of $1200 in the MRR graph, it is counted as $100 per month.
In the normalization process the formula is used:
(subscription income) / (subscription duration) * 365 / 12
In conclusion, the MRR helps to understand where the revenue comes from, allowing you to focus your efforts on those subscriptions that have a higher return, and also providing information about potential imbalance situations such as, for example, getting 90% of the revenue from only 10% of the customers.
Updated about 1 month ago