Monthly Recurring Revenue (MRR) is the term used to describe the amount of income a business makes during a period of 30 days – a full month. Their calculation is based on what customers pay companies monthly for their subscription services.
By using MRR, it is possible to get a vision of what is to come in the company’s financial future. In addition, this metric assists in creating strategies for customer loyalty. Because through it it is possible to identify moments when there is a drop in sales according to the forecast. In this way, the company can visualize what may be causing the fall in monthly earnings and, from that, create action plans to get around the scenario.
Companies sometimes earn high revenues in certain months, but in others, they end up with a lower gain. The advantage of using this monthly recurring revenue metric is that through the monthly recurring revenue it is possible to predict the next billings more effectively according to the number of existing contracts.