MRR
Monthly Recurring Revenue
Revenue
The predictable revenue a business can expect to receive every month from active subscriptions. Calculated by multiplying the number of subscribers by the average revenue per user (ARPU).
What is MRR?
Monthly Recurring Revenue (MRR) is the lifeblood of any subscription business. It provides a clear, predictable view of your revenue stream and is essential for financial planning, valuation, and growth tracking.
MRR is calculated by summing up the monthly subscription fees from all active customers. For annual subscriptions, divide the yearly amount by 12 to get the monthly equivalent.
Types of MRR:
- New MRR: Revenue from new customers acquired during the period
- Expansion MRR: Additional revenue from existing customers (upgrades, add-ons)
- Churned MRR: Revenue lost from cancellations
- Contraction MRR: Revenue lost from downgrades
- Net New MRR: New + Expansion - Churned - Contraction
Formula
MRR = Number of Subscribers × Average Revenue Per User (ARPU)
Example
If you have 500 subscribers paying an average of $50/month, your MRR is $25,000.
Why MRR Matters
MRR is the foundation metric for subscription businesses. It helps you forecast revenue, measure growth, and is a key factor in company valuation.
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