Glossary / MRR
MRR(Monthly Recurring Revenue)
Monthly recurring revenue (MRR) is the total predictable subscription revenue a business expects to generate each month. MRR is calculated as the sum of monthly subscription value across all active customers. MRR is the core metric for SaaS businesses because it normalizes annual contracts and shows month-over-month growth or decline.
Formula
MRR = Σ (Monthly subscription value of every active customer)
Example
A SaaS business has 100 customers paying $50/month each. MRR is $5,000. Next month, 5 customers churn ($250 churn MRR), 3 customers upgrade by $20 each ($60 expansion MRR), and 8 new customers sign up at $50 each ($400 new MRR). Net change: +$210. New MRR: $5,210.
Why it matters
MRR is the headline metric for any subscription business. Investors, founders, and operators all watch MRR because it predicts the next 12 months of revenue more accurately than past revenue does.
Frequently asked
What's the difference between MRR and ARR?
ARR (Annual Recurring Revenue) is MRR × 12. They measure the same thing on different timescales. SaaS businesses typically report ARR at the company level and track MRR for monthly trend analysis.
Should one-time revenue count toward MRR?
No. MRR is recurring only. Setup fees, professional services, and one-time charges should be tracked separately so MRR stays a clean signal.
Related terms
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