When it comes to measuring the success of your Software as a Service (SaaS) business, there are many Key Performance Indicators (KPIs) to choose from. However, there is one KPI that stands out as the most important — Monthly Recurring Revenue (MRR).
MRR is the amount of revenue that your SaaS business generates each month from its subscribers. It is a critical metric because it reflects the health of your business and its ability to generate predictable, recurring revenue over time.
Here are some reasons why MRR is the most important KPI for your SaaS business:
- Predictable revenue: MRR provides a clear picture of your business’s revenue stream. It allows you to forecast revenue accurately and plan for the future.
- Growth potential: By tracking MRR, you can identify trends in revenue growth and adjust your strategies to achieve growth targets.
- Customer retention: MRR is closely tied to customer retention. By monitoring changes in MRR, you can identify when customers are leaving and take action to prevent churn.
- Valuation: MRR is a critical factor in determining the valuation of your SaaS business. Investors and potential buyers will look at your MRR to assess the health and potential of your business.
In conclusion, Monthly Recurring Revenue (MRR) is the most important KPI for your SaaS business. It provides a clear picture of your revenue stream, growth potential, customer retention, and business valuation. By focusing on MRR, you can build a healthy and sustainable SaaS business.
Tools to measure the MMR
To measure MRR, you could use a variety of tools such as Baremetrics, ChartMogul, or ProfitWell. These tools provide analytics and insights into your subscription-based business, including MRR, churn rate, customer lifetime value, and more. By leveraging these tools, you can gain a better understanding of your business and make data-driven decisions to help you achieve your goals.
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