How to Estimate MRR

MRR Impact Estimation Approaches

Below are some common methods for estimating MRR during the discovery process. Choose the method that is most representative of how you envision us realizing recurring revenue from the launch of a feature or initiative. It is expected that this may change as you learn more about the problem space and possible solutions.

Method	Formula/Logic	Data Needed	Why?	Examples
New Customer MRR	Est. New Customers * Segmental ARPA	Target market segment size, conversion rate estimates from marketing, Avg. Rev. Per Acct. (ARPA)	Directly measures market expansion.	Launching a new module for a previously underserved niche within the medical or e-commerce sectors.
Expansion MRR (Upsell)	Est. # Customers Upgrading * Price Difference of Tiers	Current customer base segmentation, value proposition of new tier, price sensitivity of existing customers.	Leverages existing customer base, often higher LTV.	Introducing an "Medical and Regulatory Compliance Package" only available in the Enterprise tier
Expansion MRR (Add-on)	Est. # Customers Purchasing Add-on * Add-on Price	Customer interest in specific functionality (e.g., from CAB feedback), standalone value of the add-on.	Targeted revenue from specific valuable features.	Offering an “Itinerary Planning” for $2.50 per driver per month or “Database Management” for $500 per month
Churn Reduction MRR	Est. % Churn Reduction * Avg. MRR per Churned Customer * # Customers Retained	Historical churn data, reasons for churn (customer feedback), estimated impact of feature on retention drivers.	Improves customer LTV and overall MRR stability.	Implementing a long-requested integration or API enhancement to reduce frustration for a segment of users.
Value-Based Pricing Uplift	Link feature to quantifiable customer ROI (e.g., cost savings), then capture 10-20% of that value.	Data on customer operational costs (e.g., fuel, labor), benchmark data, ability to prove ROI of the feature.	Strong justification for premium pricing; aligns price with value delivered	Enhancing route optimization to demonstrably reduce fuel consumption by X%, justifying a higher price for the optimization module.