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Committed Monthly Recurring Revenue (CMRR)

What is Committed Monthly Recurring Revenue (CMRR)?

Committed Monthly Recurring Revenue (CMRR) is often used by businesses with subscription-based billing models, such as SaaS, to measure and predict a company’s recurring revenue acquired from contracts. CMRR takes into account the recurring revenue generated from existing subscriptions, including both new subscriptions and any expansion or upselling of existing subscriptions, while also accounting for contraction (downgrades or cancellations). CMRR is typically calculated on a monthly basis.

CMRR should not be confused with Total Monthly Recurring Revenue (TMRR), which is simply the total revenue generated from subscriptions in a given month without considering contractions or churn. CMRR provides a more accurate picture of a company’s ability to grow its subscription revenue over time.

What is the Formula for CMRR in SaaS?

The formula for CMRR in Saas is:

Beginning of the Month MRR + New MRR + Expansion MRR – Contraction MRR – Churn MRR = CMRR

The first step is taking the Monthly Recurring Revenue (MRR) at the beginning of the month. To that, a company adds the MRR from new customers acquired during the month. From there, a company adds the MRR from upsells or expansions of existing customer subscriptions during the month. From this amount subtract the MRR lost to churns (cancellations) or contractions (downgrades) during the month.

Why is CMRR Important?

CMRR is an important metric that gives a glimpse into the growth and stability of a subscription-based business. Companies often use it to assess the health of their recurring revenue stream, forecast future revenue, and make strategic decisions related to customer acquisition, retention, and expansion efforts.

What is the Difference between CMRR and MRR?

CMRR is often used by businesses with subscription-based billing models, such as SaaS, to measure and predict a company’s recurring revenue acquired from contracts. In addition to expected revenue from contracts, CMRR accounts for revenue from new contract as well as customer cancellations and downgrades.

MRR tracks the predictable and recurring revenue generated monthly by a SaaS / subscription-based company. As such, MRR does not look at customers who opt-out of services or who go for a less expensive option.

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