# MRR Renewal Rate

## What is MRR Renewal Rate?

Monthly Recurring Revenue (MRR) Renewal Rate is the percentage of MRR retained from existing customers, calculated using expansion MRR, downgrades, and cancels.
Alternate names: Net MRR Retention Rate, Net \$ Retention Rate

### Benchmark

In a SaaS business, an MRR Renewal Rate >100% is a growth indicator.

### How to calculate MRR Renewal Rate

```ƒ Sum(renewing customers MRR) / Sum(total MRR of customers due to renew) ```

### Favourable trend

Up is positive
Complexity level:
Intermediate

### Compare...

MRR Renewal Rate vs Net MRR Churn Rate

Date created: Apr 28, 2018

Latest update: Aug 12, 2019

MRR Renewal Rate is calculated by dividing the MRR for renewing customers by the total MRR of customers due to renew.

Retaining customers is a key for operating a healthy and profitable business. A high renewal rate is an indication that your offering represents a strong value proposition for your customers.

And, it’s also an important component of profitability. Acquiring a new customer can average 2 to 7 times more costly than retaining an existing customer.

For a comprehensive understanding of renewals, it’s important to track both the percentage of all customers who renew contracts, and the percentage of all revenue dollars under contract which renew.

#### Example

Example A: A company has 100 customers paying \$24,000 for annual subscriptions (\$2,000 MRR). 10 customers are due for renewal, however only 7 actually renew. The MRR Renewal Rate is

(\$2,000 MRR x 7) / (\$2,000 MRR x 10) = \$14,000 / \$20,000 = 70.0%

Example B: A company has 100 customers paying \$24,000 for annual subscriptions (\$2,000 MRR). 10 customers are due for renewal, only 9 actually renew, but 1 of these adds a \$3000 MRR upgrade. The MRR Renewal Rate is

(\$2,000 MRR x 9) + (\$3,000 x 1) / (\$2,000 MRR x 10) = \$21,000 / \$20,000 = 105.0%

### Metrics related to MRR Renewal Rate

Net MRR Churn Rate
Gross MRR Churn Rate
Logo Churn