When evaluating the growth and valuation of SaaS businesses, Monthly Recurring Revenue (MRR) is arguably the most commonly used SaaS metric out of all of them. However, and interestingly so, the MRR calculation is frequently misinterpreted, which makes it even more difficult for SaaS founders to evaluate and forecast revenue and cash flows.

Keeping all that in mind, in this blog we will be underscoring the importance of SaaS MRR growth. It is true that this is a topic that has been covered on countless blogs before (a few times on this one as well). However, the way we intend on making this blog different is by, firstly, giving you the updated information on SaaS MRR growth as per the latest trends in 2024.

Secondly, we intend on focusing exclusively on SubscriptionFlow to see how this software in particular can assist you in not only calculating accurate SaaS MRR growth but also in increasing it for the strength of your business.

What is SaaS MRR growth?

The short answer to this question is in two parts: firstly, MRR stands for monthly recurring revenue which is a documentation keeping track of the revenue generated by your company from a month to month basis. It is different from its annual sibling, ARR, in that MRR is calculated on a monthly basis whereas ARR is calculated on a yearly basis.

Secondly, SaaS MRR growth demonstrates how quickly your business is expanding and bringing in new clients. In short, MRR is the monthly fee that all users collectively pay to access the service. And the calculation of SaaS MRR growth involves comparing the month-to-month MRR with the month-prior MRR and noting the difference as a percentage.

For example, if your MRR for February is $1000 and your MRR for January was $900, then the difference between them will be $100. To calculate it as a percentage, you simply need to divide $100 with the MRR for your latest month (which is February). In doing so, you will find that in this case your SaaS MRR growth was 10% as (100/1000) x 100 = 10.

A few pitfalls when calculating your SaaS MRR growth

It is important to exercise caution when evaluating large datasets to avoid being blinded by their sheer amount of data. A large drop seen in just one day could cause unwarranted concern. But it is important to realize that the focus is not on isolated incidents. Rather, the most important thing to keep an eye on is the pattern that develops over time.

Simply put impulsive reactions to singular events can have unfavorable effects when one takes into account the countless anomalies that could occur and can be safely ignored.

This is why prudence is crucial when it comes to making significant data-driven decisions. Data should be taken into account for strategic decisions that impact a company’s direction at least once a month. This method assists in preventing automatic responses to any small change.

Likewise, using trend lines is a very useful tool for controlling anomalies and understanding average values and the trajectory more clearly. This technique aids in distinguishing meaningful trends from merely transient disruptions. You can avoid becoming distracted by tiny and insignificant deviations and instead gain a more accurate and meaningful understanding of the data by concentrating on trend lines.

How to increase SaaS MRR growth using SubscriptionFlow?

Before jumping to the concluding section of this blog, let us quickly go over what we have established. MRR is of extreme importance to all businesses wishing to expand continually and SaaS MRR growth is an important metric with which to measure this growth over a period of time.

We have also covered important pitfalls for you to avoid in order to ensure that you are not only correctly measuring your SaaS MRR growth figures but also are not going overboard in highlighting its significance.

Now, this is the point where SubscriptionFlow enters the fray. It is a powerfully robust subscription-management software that aids your business in ensuring that all its payments are collected in a timely and efficient manner.

Furthermore, the accurate invoicing provided by SubscriptionFlow’s automated billing system is essential for consistent cash flow and stable MRR. And tailored subscription schemes, such as usage-based and tiered options, appeal to a broad clientele and encourage user acquisition.

The reason why SubscriptionFlow works as well as it does is because of its deceptively simple management of handling unsuccessful payments which, in return, lowers involuntary churn. This is further helped by the analytics provided by SubscriptionFlow as they shed light on consumer preferences. These are important as in many cases they can help with service optimization and even lead to an increase in higher-tier subscription sales.

One thing that the team at SubscriptionFlow is especially proud of is its seamless integration with accounting and CRM software which guarantees effective workflows and improved customer comprehension. Both these things are essential for enhancing customer service—improved customer support capabilities increase satisfaction and retention while reducing churn by promptly resolving issues.

What is more is that SubscriptionFlow’s churn management features greatly aid in identifying and resolving customer departure reasons. It also effectively handles discounts and promotions, drawing in new members while keeping the ones it already has. It helps those who provide free trials turn trial users into paying customers.

The bottom line, and the thing that makes SubscriptionFlow so good at firstly measuring and then ensuring SaaS MRR growth, is its scalable and adaptable design that accommodates your growing business’s requirements. That said, to fully optimize MRR growth, SubscriptionFlow’s features must be combined with strong business plans, high-quality goods, and first-rate customer support.

Book a demo with SubscriptionFlow now to choose the implement a dynamic strategy to supercharge your SaaS MRR growth!