Focus on just this month’s expansion and contraction of the business. Net MRR represents all MRR movements in the month, without including the existing customer base. This metric is a useful way of tracking the health of a business, as it provides a clear picture of the amount of revenue that is being generated on a monthly basis.
How is Net MRR calculated?
The calculation of Net MRR includes all revenue that is generated on a monthly basis, minus all churn, downgrades and any refunds or discounts that have been applied. This metric does not include one-time or annual payments.
The formula for calculating Net MRR is:
Net MRR = New MRR + Reactivation MRR + Expansion MRR - Churn MRR - Downgrades MRR.
Let’s say your MRR breakdown this month is as follows:
New MRR: $250
Reactivation MRR: $50
Expansion MRR: $300
Churn MRR: $300
Downgrades MRR: $50
Your Net MRR calculation would show that your business has grown by $250 this month:
($250 + $50 + $300 - $300 - $50) = $250 (Net MRR).
Why is Net MRR important to measure?
Net MRR is important because it is a good indicator of the health of a business. If a business is growing, then its Net MRR will also increase. This metric can also be used to track the progress of a business, as it can show whether a business is increasing or decreasing its revenue.
Frequently asked questions
Have another question? Reach out to our retention expert team.
- What is the difference between Net MRR and Gross MRR?
- Net MRR is different from Gross MRR in that it takes into account any refunds or discounts that have been applied. Gross MRR does not include these factors in its calculation.
- What is a good Net MRR?
- There is no definitive answer to this question, as it will vary from business to business. However, a business with a positive Net MRR is typically growing and increasing its revenue.
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