Monthly Recurring Revenue (MRR)

MRR is the core revenue heartbeat of SaaS. Learn what counts, how to decompose MRR, and common pitfalls.

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Definition

Monthly Recurring Revenue (MRR) is the normalized monthly value of your subscription revenue that recurs (excluding one-time fees).

Answer-first summary

Monthly Recurring Revenue (MRR): Monthly Recurring Revenue (MRR) is the normalized monthly value of your subscription revenue that recurs (excluding one-time fees).

Formula

MRR

MRR = Σ (Subscription Price per Month) across active subscriptions

  • Subscription Price per Month: Normalize annual plans to monthly equivalent

10 customers on $200/mo + 5 customers on $1,200/yr ($100/mo) → MRR = 10×200 + 5×100 = $2,500.

How to improve

  • Increase new MRR (acquisition + conversion).
  • Increase expansion MRR (upsells, seats, usage).
  • Reduce churn and contraction.

Common pitfalls

  • Counting one-time fees as MRR.
  • Not normalizing annual plans.
  • Mixing booked revenue with recognized recurring revenue.

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FAQ

Is MRR the same as cash collected?
No—MRR is normalized recurring value; cash can be annual prepayments.
Should I track gross vs net new MRR?
Yes—net new shows bottom-line growth; gross components show drivers and issues.

Topic hub

Explore the full cluster for stronger context, benchmarks, templates, and comparisons.

Unit Economics Hub — CAC, Payback, LTV, and Efficiency

Related metrics

  • Annual Recurring Revenue (ARR)

    ARR is MRR × 12 (with caveats). Learn what ARR means, how to compute it, and pitfalls.

  • Customer Lifetime Value (LTV)

    Learn LTV, how to calculate it safely, common pitfalls, and how to increase it.

  • MRR Growth Rate

    MRR growth rate shows how fast recurring revenue is increasing. Learn formula and levers.

  • Gross Margin

    Gross margin is revenue minus COGS. Learn SaaS-specific COGS, benchmarks, and improvement levers.

  • ARPA (Average Revenue Per Account)

    ARPA shows average revenue per account. Learn how to calculate, segment, and increase ARPA.

  • Net New MRR

    Net new MRR shows true recurring revenue growth after churn and contraction. Learn decomposition and levers.

Related calculators

  • MRR Growth Calculator

    Compute MRR growth rate over a period from starting and ending MRR.

  • CAC Payback Calculator

    Calculate CAC payback period using CAC, ARPA, and gross margin. Share results via URL and track improvements over time.

  • LTV Calculator

    Calculate LTV using ARPA, gross margin, and churn. Includes shareable inputs via URL.

  • LTV:CAC Ratio Calculator

    Compute LTV:CAC ratio using LTV and CAC or via ARPA/gross margin/churn + CAC.

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