Net Revenue Retention (NRR)

Monthly Recurring Revenue (MRR) is the predictable, normalized monthly revenue generated from all active subscriptions. MRR is calculated by summing the monthly-equivalent value of every active subscription — annual plans are divided by 12, weekly plans are multiplied by approximately 4.33, and monthly plans are counted at face value. MRR is the foundational financial metric for subscription app businesses because it provides a consistent, comparable measure of revenue trajectory regardless of billing cadence mix. MRR is typically broken down into component parts: New MRR (revenue from first-time subscribers), Expansion MRR (revenue from upgrades, upsells, or cross-sells), Contraction MRR (revenue lost from downgrades), Churned MRR (revenue lost from cancellations), and Reactivation MRR (revenue from previously churned subscribers who re-subscribe). Tracking these components separately reveals the underlying dynamics driving overall revenue growth or decline. A company with strong headline MRR growth but high churned MRR may be masking a retention problem with aggressive acquisition spending — an unsustainable pattern that component-level analysis makes visible.

The percentage of users who stop using your mobile app over a specific time period. Churn rate is the inverse of retention rate and serves as a critical health indicator for any app business. For subscription apps, tracking churn is essential since even small reductions in churn can significantly impact revenue and customer lifetime value (LTV). Churn rate, also known as attrition rate, measures the percentage of users who stop using your mobile app over a specific period. In the context of mobile applications, churn represents users who disengage from your app—whether they uninstall it completely, cancel their subscription, or simply stop opening and interacting with it.

An upsell is a sales and monetization technique where an existing user is encouraged to upgrade to a higher-value product, plan, or subscription tier. In mobile subscription apps, upselling typically involves persuading a user on a monthly plan to switch to an annual plan (often at a per-month discount), upgrading from a basic tier to a premium tier with more features, or offering an enhanced version of a specific feature the user already uses frequently. Upselling is one of the highest-leverage revenue growth strategies because it targets users who have already demonstrated willingness to pay — the friction is much lower than converting a free user to a first-time subscriber. Effective upselling requires precise timing (presenting the upgrade when the user encounters a limitation or reaches a milestone), clear value communication (showing exactly what additional value the higher tier provides), and frictionless execution (making the upgrade a one-tap action). For web-to-app subscription models, upselling can occur both within the app (in-context prompts when a user hits a feature gate) and on the web (email campaigns, web dashboard prompts, or renewal-time offers). When combined with downselling and cross-selling, upselling forms a comprehensive pricing optimization framework that captures maximum value from each user's willingness to pay.

Annual Recurring Revenue (ARR) is the total value of recurring subscription revenue normalized to a one-year period. For mobile subscription apps, ARR is calculated by multiplying Monthly Recurring Revenue (MRR) by 12, or by summing the annualized value of all active subscriptions. ARR is one of the most important metrics for subscription businesses because it provides a predictable baseline of revenue, making it essential for financial planning, investor reporting, and company valuation. Unlike total revenue, ARR excludes one-time purchases, refunds, and non-recurring fees, providing a cleaner view of the sustainable revenue engine. Growth-stage subscription apps track ARR trajectory closely, as consistent month-over-month ARR growth signals product-market fit and effective monetization strategy.

The LTV:CAC ratio measures the relationship between the lifetime value of a customer and the cost of acquiring that customer. It is one of the most important unit economics metrics for subscription app businesses. An LTV:CAC ratio of 3:1 or higher is generally considered healthy, meaning the revenue generated by a user over their lifetime is at least three times what it cost to acquire them. A ratio below 1:1 means the business is losing money on every customer acquired. This metric is critical for evaluating the sustainability of growth strategies — aggressive user acquisition spending only makes sense if LTV sufficiently exceeds CAC. For subscription apps, improving the LTV:CAC ratio can be achieved from both sides: increasing LTV through better retention, pricing optimization, and upselling; or decreasing CAC through more efficient ad spend, higher organic install share, and web-based checkout flows that avoid platform commissions. Investors scrutinize this ratio closely when evaluating subscription businesses, as it directly indicates whether the company can scale profitably.