MRR (Monthly Recurring Revenue)
Quick answer
What is mrr (monthly recurring revenue)?
The predictable revenue a subscription business collects every month from active subscribers.
Also called: Monthly recurring revenue, MRR rate, Subscription MRR.
How to calculate mrr (monthly recurring revenue)
MRR = number of active paying subscribers × average monthly price per subscriber
Worked example: 120 members paying $49 a month = 120 × $49 = $5,880 MRR.
Annual plans are counted by dividing the yearly price by 12, so a $588 annual plan adds $49 to MRR, not $588.
In plain English
MRR totals what every active subscriber pays in a month, giving a business a predictable baseline instead of relying on one-time sales. It's the core health metric for any subscription or membership offer.
Example
200 subscribers paying $49/month = $9,800 in MRR.
Why it matters
It's the reason churn matters so much to subscription businesses — losing MRR to cancellations can silently outpace new signups.
Why MRR is the number subscription businesses watch
Monthly recurring revenue is the predictable portion of your income: what arrives every month from people who are already subscribed, ignoring one-off sales. It matters because it is the only figure that tells you whether the business is compounding or just having a good month.
Total revenue can rise on a single large one-off sale while the underlying subscription base shrinks. MRR strips that out, which is uncomfortable and useful in equal measure.
How to count it correctly
Three rules prevent most MRR mistakes, and all three make the number smaller and more honest.
- Convert annual plans to monthly. A $588 annual plan contributes $49 of MRR, not $588 in the month it was paid.
- Exclude one-off purchases entirely — setup fees, single products, add-on packs. They are revenue, but they are not recurring.
- Count discounts at what people actually pay. A subscriber on 50% off contributes half, not full price.
The movements underneath the total
A flat MRR figure can hide a great deal of movement. Breaking the change into its parts shows where growth is really coming from: new MRR from new subscribers, expansion from upgrades, contraction from downgrades, and churned MRR from cancellations.
Net new MRR is new plus expansion, minus contraction and churn. A business adding plenty of new subscribers while losing almost as many is working extremely hard to stand still, and the total alone will never reveal it.
MRR, ARR and what counts as healthy
ARR is simply MRR multiplied by twelve — the same number expressed annually. Neither has a universal benchmark, and any figure quoted as one is usually marketing rather than measurement.
Judge MRR against your own previous months, and always read it next to churn. Growing MRR alongside growing churn means you are filling a bucket with a widening hole, and that combination becomes visible long before it becomes fatal.
Common questions
- What does MRR stand for?
- MRR stands for monthly recurring revenue: the predictable amount a subscription business bills every month, before one-off sales are counted.
- How do you calculate MRR?
- Multiply the number of active paying subscribers by the average monthly price they pay, converting any annual plans to their monthly equivalent by dividing by 12.
- What is the difference between MRR and ARR?
- ARR (annual recurring revenue) is simply MRR multiplied by 12. MRR is the month-by-month view; ARR is the same number expressed as a year.
- What does MRR mean in simple terms?
- It is the money you can count on arriving every month from people who are already subscribed, ignoring one-off sales, refunds pending and anything you hope to sell later.
- Is MRR the same as revenue?
- No. Revenue is everything you collected in a period, including one-time purchases. MRR only counts the recurring portion, which is why it is the number used to judge whether a subscription business is actually growing.
- What counts as good MRR growth?
- There is no universal benchmark, and any number quoted as one is usually marketing. Judge it against your own previous months and against churn: MRR that grows while churn also grows is fragile growth.
Run your own numbers
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