What is MRR?
Monthly Recurring Revenue, the predictable subscription income a SaaS business earns each month. ARR is simply MRR times twelve.
// business-simulation › Models
Forecast monthly recurring revenue over time as new MRR is added each month and churn erodes the base — the core SaaS growth recursion.
MRR(next) = MRR × (1 − monthly churn) + new MRR ; repeat for N months
Monthly Recurring Revenue, the predictable subscription income a SaaS business earns each month. ARR is simply MRR times twelve.
Each month it shrinks the existing MRR by the churn rate, then adds the new MRR you win, and repeats. That recursion is the heart of SaaS growth modelling.
Because it works against you every single month on a growing base. Even modest churn can cap growth, since you must replace lost revenue before adding any net new.
The MRR at the end of each month, so you can see the growth curve, whether it accelerates, plateaus, or stalls as churn catches up with new sales.
It is a simplification. Real new MRR varies with seasons, marketing and market size. Try different values to bracket optimistic and cautious scenarios.