New MRR (Monthly Recurring Revenue) is the additional recurring monthly revenue that comes from a new customer’s subscription. It does not focus on MRR gathered from current customers.
New MRR = New customers * MRR per customer
Let’s look at an example.
At the beginning of June, you have 5 customers. At the end of the month, you have 10 customers. If each customer brought in $1000 in MRR, your new MRR for June would be $5000.
New MRR is what makes a subscription business great and indicates a healthy business model! Get a new customer to fall in love you with once — and hopefully, they will stick with you through thick and thin. This SaaS metric is one to watch, as it can help indicate healthy business growth.
New MRR is a key metric to oversee your sales and track the performance of your marketing program.
You want to make sure that your New MRR is higher than your Customer Acquisition Cost. If your Customer Acquisition Cost is higher than your New MRR, this could be a good sign to reevaluate and reallocate your marketing budget to new channels.
Churn… It’s a word that is always in the back of every founder’s mind when we think about growing any subscription-based business.
We all want to make money every month. And to do that, it’s essential to make sure your New MRR + Expansion MRR is greater than the MRR that churns each month! Otherwise, you’re losing money and your business is shrinking. No Bueno!
Calculating Net New MRR will show you the health of your business — and New MRR is a big part of that ratio.
Net New MRR = New MRR + Expansion MRR (“upgrades”) - Churn MRR (monthly revenue lost by cancellations or downgrades)
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