What is MRR in Digital Marketing?

In digital marketing and online businesses, you might have come across the term MRR. But what exactly is MRR, and why is it important?

What is MRR?

MRR stands for “Monthly Recurring Revenue”. It is the amount of money a business expects to earn every month from its subscribers or customers. This money comes from products or services that are sold on a subscription basis.

For example, think of Netflix. You pay a fixed amount every month to watch shows and movies. That fixed income Netflix gets from each customer every month is part of its MRR.

So, if 1,000 people are paying $10 per month, the MRR is:

1,000 x $10 = $10,000 per month.

Why is MRR Important?

MRR helps a business understand its monthly income flow. It’s especially useful for companies that sell:

• Software as a Service (SaaS)
• Online memberships
• Subscription boxes
• Digital tools and platforms

Instead of worrying about one-time sales, MRR gives a steady and predictable income. This makes it easier for a business to plan ahead.

Where is MRR Used in Digital Marketing?

In digital marketing, MRR is used to measure how well marketing strategies are working.

For example:

• If a company spends money on ads and gains more subscribers, the MRR will increase.
• If a business loses subscribers, the MRR goes down.

So marketers keep a close eye on MRR to see if they are growing the business or not.

MRR vs Revenue

Let’s understand the difference between MRR and regular revenue with a simple table:

As you can see, MRR is stable and repeatable, while regular revenue depends on constant new sales.

How to Calculate MRR?

Calculating MRR is quite simple.

Here’s the basic formula:

MRR = Total number of paying customers × Average revenue per customer per month

For example:

• You have 500 customers.
• Each pays $20 per month.

So,

MRR = 500 x $20 = $10,000 per month

That means your business makes $10,000 every month from current customers.

Types of MRR

There are different types of MRR. Let’s understand them one by one:

1. New MRR
   This comes from new customers who just signed up during the month.
2. Expansion MRR
   This comes when existing customers upgrade or buy add-ons.
3. Churned MRR
   This is the amount lost when customers cancel their subscriptions.
4. Net New MRR
   This is calculated as:
   New MRR + Expansion MRR – Churned MRR

Knowing these helps marketers see if the company is growing or shrinking each month.

Example: A Simple Case Study

Let’s say you run a digital tool that charges $30 per month.

• At the start of January, you had 100 users → MRR = 100 x $30 = $3,000
• In January:
  • 20 new users joined (New MRR = $600)
  • 5 existing users upgraded plans, adding $200 (Expansion MRR)
  • 10 users cancelled (Churned MRR = $300)

So, Net New MRR = $600 + $200 – $300 = $500

Your new total MRR = $3,000 + $500 = $3,500

This means your business is growing month after month.

How MRR Helps in Decision Making

MRR is not just a number. It helps in many ways:

• Budget Planning: Helps decide how much to spend on ads or hiring.
• Marketing Success: If MRR increases, your marketing is working.
• Business Growth: Investors often look at MRR to decide if a company is worth funding.
• Predicting Profits: It helps guess how much money you’ll make in the future.

MRR and Customer Retention

In digital marketing, keeping existing customers is just as important as gaining new ones.

• If many customers leave, your churn rate is high, and MRR drops.
• If customers stay and spend more, MRR goes up.

That’s why marketers focus on:

• Better customer support
• Engaging emails
• Loyalty programs
• Useful content

These actions help retain customers and keep the MRR growing.

Tools to Track MRR

There are many tools that help businesses track MRR, such as:

• Stripe (payment and subscriptions)
• Chargebee
• Baremetrics
• ProfitWell
• HubSpot
• Zoho Subscriptions

These tools give dashboards, reports, and even predictions.

Final Thoughts

MRR is one of the most useful numbers for online businesses, especially those with subscriptions. It tells you how much money you’re making every month — and more importantly, how stable your income is.

Also Read:

• Do Digital Marketing Agencies Create Content?
• Are Digital Marketing Agencies Worth It?
• What Does a Digital Marketing Account Manager Do?

Frequently Asked Questions