Customer Retention | 6 MIN READ

10 Tips to Quickly and Consistently Increase Your Monthly Recurring Revenue (MRR)

MRR, monthly recurring revenue is a normalized amount of money for a business’ forecasted revenue that is expected to be earned during a month’s time frame.

Simran Mohanty
Jul 13, 2020


It is a known fact that MRR aka Monthly Recurring Revenue is a lifeline for SaaS business. Since they live or die off this scheme, you might want to take a notch up if you wish to see a boom in the SaaS market. Statistics claim that by the year 2023, the business shall grow at a compound rate of 17% with over $60 million. 

What is MRR and How to calculate it?

In a subscription-based business, it is expected to regularize a recurring revenue to a monthly figure. You must have a track of your billing records and pricing plans over the time that is exactly what MRR is. Simply put, it gives you an exact status over how you are performing and can help to predict the next stage of your business, whether it is going good, bad, or ugly. 

Calculation of MRR

A rather straightforward method to calculate MRR is by taking the total number of paying customers and then by multiplying it by ARPA. Now ARPA is nothing but the average amount of your customers pay up every month.


For instance,

Say you have 10 paying clients and the average amount is $50 every month. By using the method of ARPA, you MRR = 10 x $50 = $500.

Now let us quickly look at 10 such amazing tips that assure you a consistent increase in your MRR, or monthly recurring revenue.

Up your Upsells

You can begin by applying effective expansion tactics, upsells being one of them. Upselling and cross-selling are two important terms in the vocabulary of SaaS.

For that, you can offer your customers more premium plans and services. Upgradation to a newer version is seen to increase the chances of customer stickiness. Not just that, you may offer a few extra features for a higher amount. Being an influential tool, it will boost your clients’ monthly spending. Even when they move onto a premium plan or add into your brand-new features.

Note: The key to successful upselling is reaching out to the right prospects at the right time.

Strategize and split your Features

Offering all of your best services under one whole bundle might just put you into unwanted trouble. Most of the facets in a SaaS package are put aside when the clients choose the features they require. And the rest is ignored.

Hence, you must establish a plan. Plan to split your features of the baseline product that yo market. Put the additional facets as an add-on service. Do not club all the features under a plan and then gift it to all of your customers. You will have to put the cheese carefully in the trap!

You will soon see that doing so will boost you a reliable strategy that will split your SaaS facets and also bring you more revenue.

Price on Rise

Though, it is said that most of the SaaS companies, offer underpriced plans. To garner a quick win and rev your MRR, you might increase your prices by a dent, perhaps by 10, 20, or 50%, whichever suits your niche best. If you are underpriced, you will experience a marginal hike in churn and a massive nudge in your monthly recurring revenue as well.

Reality says that underpricing a quality product might provide useful functions that act as a hindrance to the perceived values, which might kick your business. And if you are worried about losing your customers with a price hike, you do not have to worry as long as you render value. Remember, it is value and quality that are like the black horse in any race.

Let the Newbies roll in

One of the vital ways to increase customer retention is by consistently generating the number of qualified leads. You ought not to only focus on the existing customers all the time. You might just end up alienating them away and you do not want that, do you?

Identify your target audience and zero in your marketing pushes away. Tailor all your efforts to reach out to their needs and desires respectively. Once you roll in an effective customer acquisition strategy into the game board, your business is all set to grow MRR in exponential terms.

Opt for Prepaid Payment methods

When you start an annual prepaid plan, your clients’ loyalty will take to rise. Having said that, you must note that alluring the customer base to opt for a whole year in advance payment should be a daunting task to take up. And that is where you will have to mince your plan. By mincing, I mean you will have to add up a few discount offers, or maybe some incentivize to the clients so that they commit longer.

No nods to free plans

While free plans allow your clients to test your product without any commitment, there is still no guarantee that the customer will stick around until the end. Also, when you offer a little too much free, there is a good chance that the upgrade rates will decrease.

Consequently, as you lessen your free plan facets, and instead use time-restricted free trail plans – this will help augment the upgrade rates in return. For instance, you can take the example of Dropbox. Now Dropbox charges its clients on the basis of the amount of storage they use. Going for similar technics usually lessen the adverse impacts on your MRR.

Delve into Customer Satisfaction

It is of no good news to underestimate the feelings of your clients. What they think and how they feel about you is of utmost importance to your company. This way you can consistently maintain and augment your MRR. Ensure that your customers are well taken care of and are receiving constant personalized attention. When you keep your customers happy, they tend to become fiercely loyal to you and advertisement your brand too.

Your USP is Quality!

Your monthly recurring revenue can never be jeopardized when you put quality first. The quality itself should speak for itself. Especially, when it comes to SaaS models, it basically simmers down to the aspect of quality that makes the verdict. You need to ensure that the said quality and value are clearly conveyed to your clients. This is a surefire method of keeping your subscriptions active and revving up your MRR.

Pull in more leads

MRR is a product of your clients, which in turn is a product of your leads. Pull in some of the strategies such as in-product marketing which helps you to get a huge return of investment. As long as you are able to calculate the marketing ROI, you will see a surplus increase in leads, which eventually will lead to higher MRR.

Final Take

One of the best ways for any SaaS company to amp their revenue stream is by truly understanding MRR. Further, keeping a close eye on the monthly recurring revenue will eventually become an essential facet of doing business after adopting the SaaS model. It would not only lead to precious insights into your company but also enhance the effectiveness of your marketing strategies.

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Originally Published July 13th, 2020, Updated December 30th, 2020

Simran Mohanty

Simran hails from the content marketing backdrop with extensive knowledge in blogs, articles, and technical whitepapers in the non-fictional domain. She uses her 'gift of the gab' to explore new possibilities on her way and to make an exquisite impact on her readers. In her spare time, she likes to read journals on artificial intelligence or play with her cute kittens.

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