Forecast your MRR, ARR, and Customer Lifetime Value (LTV).
Monthly Recurring Revenue (MRR):$0.00
Annual Recurring Revenue (ARR):$0.00
Average Customer Lifetime (Months):0 Months
Customer Lifetime Value (LTV):$0.00
Estimated Revenue in 12 Months:$0.00
Understanding Subscription Metrics
Running a subscription-based business, often referred to as SaaS (Software as a Service), requires tracking specific health indicators. Unlike traditional retail, your revenue is recurring, which means small changes in growth or churn have massive long-term impacts.
Key Formulas Used
MRR (Monthly Recurring Revenue): Total active subscribers multiplied by the average revenue per user (ARPU).
ARR (Annual Recurring Revenue): Your current MRR multiplied by 12. This is your "run rate."
Churn Rate: The percentage of customers who cancel their subscription each month.
LTV (Lifetime Value): The total revenue you expect to earn from a single customer before they churn. Calculated as: Monthly Price / Churn Rate (decimal).
Example Scenario
If you have 1,000 subscribers paying $50/month with a 2% monthly churn rate:
Your MRR is $50,000.
Your ARR is $600,000.
The average customer stays for 50 months (1 / 0.02).
Your LTV is $2,500 ($50 / 0.02).
How to Improve Your Subscription Revenue
To scale your business, focus on two levers: acquisition and retention. If your growth rate is higher than your churn rate, your business is expanding. If churn exceeds growth, your revenue will shrink regardless of how many new users you sign up. Reducing churn by even 1% can significantly increase your LTV and overall valuation.