Basics of Monthly Recurring Revenue (MRR)
Learn to track and calculate MRR of your mobile app with subscriptions.
For businesses offering subscription services, Monthly Recurring Revenue (MRR) stands as a pivotal metric, representing the total income generated from subscriptions on a monthly basis. For companies depending on regular subscription income, MRR provides a precise snapshot of the monthly financial performance.
Why Track MRR
MRR is a useful metric that provides value in many different ways, for example:
- MRR assists businesses in forecasting future earnings, making it easier to plan for growth and improve cost management. For app developers seeking funding or considering selling a company, this metric is also useful, as investors often use MRR to assess a company’s value.
- Monitoring MRR helps assess overall customer retention rates. A decrease in MRR may indicate subscription cancellations, signaling a need for product or service enhancements.
- MRR tracking empowers mobile apps and businesses to identify growth opportunities and make informed decisions on where to invest in their products or services. It also shows which subscription plans are popular and which ones need to be improved.
- For apps and games with subscriptions, MRR provides an exact measure of regular income. This information guides managers in decision-making, future planning, and continuous improvement.
Devtodev’s Map of Key Analytics Metrics in Games
Calculating MRR
Calculating MRR for mobile games, especially those with in-app purchases and subscriptions, can be a bit different from traditional subscription-based businesses. There are several calculation methods:
Manual Methods:
- The simplest method involves summing the total revenue generated from paying subscribers for the past month without considering expenses:
MRR = Total monthly subscription revenue - Incorporating Average Revenue Per Paying User (ARPPU):
MRR = Number of active subscribers * ARPPU
Make sure that all data represents the same month. ARPPU should only include revenue from recurring payments and not income from one-time fees, such as sporadic in-game purchases.
However, it’s not that simple. Within one month, users change their plans, upgrade or downgrade, unsubscribe, etc. If your product has more than a couple dozen subscribers, your best choice would be one of the analytics platforms, such as Devtodev.
Using Analytics Platforms:
Analytics platforms offer a comprehensive approach that allows you to not only calculate MRR, but also provide detailed breakdowns and analysis.
In Devtodev, MRR is presented as a monthly adjusted subscription recurring gross. To calculate it, you need to:
Open Smart view -> Monetization -> Subscriptions
Then open the Structure tab, select Subscription recurring gross, aggregation period, period, preferred grouping type, and click Refresh:
Or, if you have subscription bundles, select:
With Devtodev, you track both subscription gross and the revenue generated by each subscription bundle (price plan) over the selected period. This allows you to compare the plans and assess their performance over time.
Also, you can analyze the components of MRR and get a broader picture of it:
Improving MRR in Mobile Apps and Games
Sustaining or enhancing MRR is critical for business growth, and strategies may vary based on the app type. However, common recommendations include:
- Positive first impression: Ensure your app delivers a positive and lasting experience to attract and retain users.
- Target quality users: Use various strategies like ads, influencers, and app store optimization to reach the right audience, increasing the likelihood of converting users into paying customers.
- Enhance user experience: Invest in making your app user-friendly, as a seamless experience contributes to subscriber satisfaction and loyalty.
In conclusion, understanding and improving MRR are crucial for apps and games utilizing a subscription-based monetization model. Analytics platforms such as Devtodev are valuable in this regard . Devtodev not only simplifies calculation of MRR and its components, but also allows for tracking and in-depth analysis. Consistent monitoring, strategic adjustments, and customer satisfaction ensure sustained and profitable performance for your app.
