Quick Answer (TL;DR)
MRR Growth Rate measures month-over-month growth in MRR. The formula is (Current MRR - Previous MRR) / Previous MRR x 100. Industry benchmarks: 10-20% MoM early stage; 5-10% growth stage. Track this metric when tracking revenue momentum.
What Is MRR Growth Rate?
Month-over-month growth in MRR. This is one of the core metrics in the revenue metrics category and is essential for any product team serious about data-driven decision making.
MRR Growth Rate connects product performance to business sustainability. Revenue metrics translate user behavior into financial outcomes, making them essential for board reporting, investor communication, and strategic planning.
Understanding mrr growth rate in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
(Current MRR - Previous MRR) / Previous MRR x 100
How to Calculate It
Suppose you measure (current mrr - previous mrr) at 500 and previous mrr at 2,000 in a given period:
MRR Growth Rate = 500 / 2,000 x 100 = 25%
This tells you that one quarter of the base is converting or meeting the criteria.
Benchmarks
10-20% MoM early stage; 5-10% growth stage
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track MRR Growth Rate
When tracking revenue momentum. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need revenue indicators
Leadership or investors ask about revenue performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact mrr growth rate
You need a quantitative baseline before making a strategic decision
How to Improve
Optimize the numerator. Increase the number of users or events in (current mrr - previous mrr) through better UX, clearer CTAs, and reduced friction in the conversion path.
Qualify the denominator. Ensure previous mrr represents the right audience. Better targeting means a higher conversion rate.
Optimize pricing regularly. Most companies set pricing once and forget it. Review pricing quarterly, test willingness to pay, and ensure your pricing reflects the value you deliver.
Focus on expansion revenue. Growing revenue from existing customers is 5-7x cheaper than acquiring new ones. Build upgrade paths, usage-based pricing tiers, and cross-sell opportunities.
Reduce involuntary churn. Failed payments account for 20-40% of SaaS churn. Implement dunning flows, card update reminders, and retry logic to recover revenue automatically.
Common Pitfalls
Ignoring sample size. Small sample sizes produce volatile rates that do not reflect true performance. Ensure you have statistically significant data before drawing conclusions or making changes.
Ignoring revenue quality. Not all revenue is equal. Revenue from customers likely to churn, deeply discounted deals, or one-time contracts should be weighted differently than high-quality recurring revenue.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
LTV:CAC Ratio --- relationship between customer value and acquisition cost
New MRR --- revenue from newly acquired customers
Lifetime Value (LTV) --- total revenue expected from a customer over their lifetime
Expansion MRR --- additional revenue from existing customers (upsells, cross-sells)
Product Metrics Cheat Sheet --- complete reference of 100+ metrics