Definition
MRR (Monthly Recurring Revenue) is the recurring subscription revenue you expect from active customers in a given month. It is a standard operating metric for subscription businesses because it updates quickly and connects to retention and expansion.
Common components
- New MRR: from new customers.
- Expansion MRR: upgrades, more seats, add-ons.
- Contraction MRR: downgrades, seat reductions.
- Churned MRR: cancellations and lost recurring revenue.
Common mistakes
- Including one-time revenue in MRR.
- Mixing revenue recognition with billing/cash timing.
- Changing definitions month-to-month (breaking trend analysis).
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "MRR (Monthly Recurring Revenue)" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., MRR Calculator) to sanity-check assumptions.
- Read the related guide (e.g., MRR: what it means (and how to track it cleanly)) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- MRR Calculator: Estimate Monthly Recurring Revenue (MRR) from customers and ARPA.
- MRR Forecast Calculator: Forecast MRR over time using new MRR plus expansion, contraction, and churn rates.
- ARR Calculator: Estimate Annual Recurring Revenue (ARR) from customers and ARPA.
- MRR Growth Rate Calculator: Calculate MRR growth over a period and convert it to CMGR and annualized growth (CAGR).
- MRR Churn Rate Calculator: Calculate MRR churn rate from churned MRR and starting MRR (with monthly-equivalent conversion).
Guides
- MRR: what it means (and how to track it cleanly): A guide to MRR: definitions, what to include/exclude, and how to decompose MRR changes over time.
- MRR forecasting: a simple bridge model (new, expansion, churn): A practical way to forecast MRR using a monthly bridge: starting MRR + new MRR + expansion - contraction - churn.
- Bookings vs ARR: what ARR means (and what it doesn't): Bookings vs ARR explained: what ARR is (and isn't), plus how it differs from bookings and cash receipts.
- Churn: How to measure churn rate correctly: A guide to churn rate: customer churn vs revenue churn, measurement choices, and how to track churn by cohort.
- Gross revenue churn: definition, formula, and how to calculate it: Gross revenue churn explained: contraction + churned MRR relative to starting MRR, with monthly-equivalent conversion and pitfalls.