Monthly Recurring Revenue (MRR)
Predictable recurring revenue generated each month from active subscriptions
What is Monthly Recurring Revenue (MRR)?
Monthly recurring revenue is the total value of all active subscriptions, normalised to a monthly figure. It shows the predictable revenue a subscription business earns each month.
MRR is the base measure for growth in subscription businesses, and the building block for annual recurring revenue.
How this KPI is measured
- Function
- Sales
- Sub-function
- Recurring Revenue
- Industry
- Software / Technology (SaaS)
- Type
- Lagging
- Impact
- Revenue
- Unit
- $
- Measurement frequency
- Monthly
- Formula
- Sum of all active subscription values normalised to a monthly figure
How to calculate it
Add up all active subscription values, converting each to a monthly amount.
For example, 100 customers on 500 per month plus 20 customers on an annual plan of 6,000 (500 per month) gives (100 x 500) + (20 x 500) = 60,000.
Exclude one-off fees. Track new, expansion, contraction and churned MRR to understand what drives changes.
Where it is used
Tracking growth
Follow monthly progress.
Forecasting
Project revenue.
Understanding movement
Explain changes by component.
How to improve it
Tips and common mistakes
- Do not count free trials or one-off charges.
- Handle discounts and credits consistently.
- Use MRR growth to spot trends early.
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