Software Growth

New MRR

New MRR is the monthly recurring revenue added in a period by customers who started paying for the first time.

New MRR measures how much recurring revenue your acquisition engine produced this month. It counts customers who went from not paying to paying, and nothing else. It is the clearest read on whether your marketing, sales and trial conversion are working.

How to calculate new MRR

Add the monthly value of every first-time paid subscription started in the period.

If 60 customers start paying $40 a month, new MRR is $2,400. If one of them signs an annual plan at $480, count $40 for that customer, not $480. This is the same normalization you apply to total MRR.

ChartMogul calls this movement New Business: it happens when a lead on no paid plan buys a first subscription.

What does and does not count

  • Counts: a trial that converts to a paid plan, a new customer who pays immediately, a new customer on an annual plan (at the monthly equivalent).
  • Does not count: a returning customer (that is reactivation MRR), an upgrade by an existing customer (expansion MRR), setup fees, or free users.

Timing is the usual dispute. A trial converting on day 14 should land in new MRR on the day the first charge succeeds, not when the person signed up. Pick one rule and keep it.

How to read it

New MRR on its own can mislead. A product adding $2,400 a month sounds healthy until churn takes $2,000 back. Look at it next to churned MRR and inside net new MRR. David Skok recommends charting the components of MRR separately so you can see which one is moving, in SaaS Metrics 2.0.

Divide your sales and marketing spend by the number of customers behind new MRR to get customer acquisition cost. If you spent $6,000 and added 60 customers, CAC is $100, and each customer brings $40 of new MRR.

Small SaaS angle

For a bootstrapped product, new MRR is often lumpy. One good launch week or a single directory listing can account for half the month. Track a trailing three-month average so one spike does not convince you that a channel works. Also split it by source if you can: new MRR from search, referrals and paid ads behaves very differently over time.

Sources

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