Monthly recurring revenue (MRR) is a recurring sales revenue model that relies on subscription-based business models to make recurring revenue.
In a traditional product model, a new customer acquires a physical good and pays for it upfront. MRR allows recurring purchases of goods and services billed monthly or annually.
Examples of MRR:
- Condo maintenance fees
MRR provides a steadier stream of income and scales revenue more quickly than other models.
The key difference between MRR and traditional models is that the recurring revenue is generated from an existing customer base rather than from new customers. This means the business only needs to acquire a few customers to sustain itself.
Businesses can use MRR to check their health by tracking growth over time. If a business’s MRR is increasing over time, the company is on track to achieve its long-term goals.