MRR (Monthly Recurring Revenue)
Monthly Recurring Revenue (MRR) is the predictable, normalized monthly revenue generated from all active subscriptions. It's the north star metric for SaaS companies.
Formula
In depth
MRR normalizes all subscription plans to a monthly figure — annual plans are divided by 12, so a $1,200/year plan contributes $100 to MRR.
Types of MRR: - New MRR: revenue from new customers acquired this month - Expansion MRR: additional revenue from existing customers (upgrades, seats) - Contraction MRR: revenue lost from downgrades - Churned MRR: revenue lost from cancelled subscriptions - Net New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR
A healthy SaaS has Expansion MRR > Churned MRR — meaning the existing customer base grows without acquiring new customers. This is called negative churn.
Real example
If you have 50 customers on $29/month, 20 customers on $99/month, and 5 annual customers at $1,188/year: MRR = (50 × $29) + (20 × $99) + (5 × $99) = $1,450 + $1,980 + $495 = $3,925 MRR.
Tools & calculators
Related terms
ARR (Annual Recurring Revenue)
Annual Recurring Revenue (ARR) is the yearly equivalent of your recurring subscription revenue. It's MRR × 12 and is the primary metric investors use to value SaaS companies.
CAC (Customer Acquisition Cost)
Customer Acquisition Cost (CAC) is the total cost of acquiring one new paying customer, including all marketing and sales spend.
LTV (Lifetime Value)
Customer Lifetime Value (LTV or CLV) is the total predicted revenue you'll earn from a customer over the entire duration of your relationship.
Churn Rate
Churn rate is the percentage of customers (or revenue) that cancels or doesn't renew in a given time period. It's the single most important retention metric for subscription businesses.
ARPU (Average Revenue Per User)
Average Revenue Per User (ARPU) is the average monthly revenue generated per paying customer. It's the building block for LTV, MRR projections, and pricing decisions.
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