Table of Contents
Key takeaways:
- New monthly recurring revenue (MRR) helps you track revenue coming from new customers
- Track new MRR to ensure that your acquisition costs are at a profitable level and motivate sales and marketing teams
- New MRR is an important financial and growth metric for SaaS brands that Baremetrics can help you track
Understanding New MRR
New MRR (Monthly Recurring Revenue) is the revenue that comes from new customers within a given month.
It’s a helpful metric to track to assess potential business and revenue growth stemming from new customer acquisition.
Focusing specifically on growth? You’ll want to track MRR growth rate and net MRR growth rate, too.
How to Calculate New MRR
You can calculate new revenue by adding up any monthly recurring revenue that comes from new customers.
New MRR = Total sum of monthly recurring revenue from customers acquired in a set period
If you started a month with 10 customers and at the end of the month have 12, then you gained 2 new customers. Let’s say your 2 new customers brought with them a total of $100 each in MRR. Then your New MRR for the month would be $100.
Note that I’m not counting any setup fees or additional one-time costs that makeup Total Contract Value (TCV) – I’m only considering Monthly Recurring Revenue coming from the new customers.
When calculating your monthly recurring revenue, watch out for these MRR calculation mistakes.
Why Monitor New MRR?
Monitoring New MRR helps you understand the dynamics of your recurring revenue. It shows you the impact of new customer acquisition on your overall income and can provide insights into what's driving growth or decline in revenue.
As a note: MRR and accounting revenue have key differences. Check out our post on MRR vs. accounting revenue to learn more
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Benefits of New MRR
Keep Your Customer Acquisition Costs in Check
New MRR is a great way to check your Customer Acquisition Cost (CAC). If you’ve got an acquisition cost that’s higher than your New MRR, you might want to consider adjusting your marketing budget so that your acquisitions don’t eat into your profit.
Put it to good use: Make sure your New MRR total for a month is higher than the cost of acquiring all new business. Compare new MRR to that month’s total acquisition costs (including the costs of sales, marketing, and digital growth efforts).
Motivate Your Sales and Marketing Teams
Since New MRR comes from new customers, you can track your sales and marketing performance using this metric. Monitoring the progress of your sales and marketing efforts is essential—first, because you’ve got to know if what you’re doing is working, and second because the folks in those departments love a bit of motivation!
Put it to good use: Some companies display metrics like New MRR in a highly visible place in the office (like on a big-screen TV) to keep their sales and marketing teams motivated and informed. This way, the team can see positive or negative mobility. We’re a remote team, but we’ve got our numbers published for anyone to see—find what works best for your team/culture.
Using New MRR to Understand New Net MRR
New Net MRR uses several types of MRR to determine whether you lost more revenue than you gained within a month’s time.
• New MRR: Additional MRR from new customers
• Expansion MRR: Additional MRR from existing customers (also known as an “upgrade”)
• Churned MRR: MRR lost from cancellations or downgrades
Net New MRR = New MRR + Expansion MRR – Churned MRR
If your Expansion MRR and New MRR are less than what you’ve churned, then my friend, you’ve lost money. If your Expansion MRR and New MRR are more than what you’ve churned, sweet! Maybe take the team out and celebrate the growth.
Track MRR & Key Financial Metrics with Baremetrics
If you want clear insight into your financial and subscription performance metrics, Baremetrics can help. We offer 26 subscription-focused metrics, with multiple monthly recurring revenue metrics like the following:
Tired of wasting time on spreadsheets? Get a free trial of Baremetrics today!
