What Is MRR (Monthly Recurring Revenue)?

The predictable, normalized monthly revenue from all active subscriptions.

The predictable, normalized monthly revenue from all active subscriptions.

Monthly Recurring Revenue (MRR) is the total predictable revenue a SaaS company expects to earn every month from its active subscriptions. It normalizes annual, quarterly, and monthly plans into a single monthly figure.

MRR is the foundational metric for SaaS businesses because it shows true recurring revenue momentum. Investors, boards, and operators all use MRR to measure growth and business health.

MRR is typically broken down into New MRR (from new customers), Expansion MRR (upgrades and add-ons), Contraction MRR (downgrades), and Churned MRR (cancellations). The sum of these components gives you Net New MRR.

Formula

MRR = Number of Subscribers × Average Revenue Per Account (ARPA)

Example

If you have 200 customers paying an average of $50/month, your MRR is $10,000.

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