What is MRR?
Monthly recurring revenue (MRR) is the monthly value of the subscriptions a business has in force on a given date. If you are asking "what is MRR" because a dashboard, an investor, or a buyer used the term, the short answer is: MRR tells you how much recurring revenue the business would earn in a normal month if every active subscription simply continued at its current price.
That definition contains three ideas that do most of the work:
- Recurring. Only charges that repeat under a subscription or contract belong in MRR. Setup fees, one-time purchases, and consulting do not.
- Normalized. Every billing interval is converted to a monthly amount. A $1,200 annual plan contributes $100 of MRR each month, not $1,200 in the month it is paid.
- Point in time. MRR is a snapshot of the active subscription base on a date, not a total of payments collected during a month.
This guide covers the definition, the basic calculation, and how to read MRR as a founder or buyer. If you already know the basics and need the relationship between monthly and annual figures, read MRR vs ARR. If you are trying to work out what a "verified" revenue figure actually proves, read what verified revenue means.
Why MRR exists
Cash receipts in a subscription business are lumpy. One month an annual customer pays upfront; the next month nothing arrives from them. A launch promotion or a batch of lifetime deals can make one month look spectacular. MRR strips that noise out so you can see whether the underlying subscription engine is growing, flat, or shrinking.
That is why MRR is used for:
- tracking month-over-month growth;
- calculating average revenue per account (ARPA);
- measuring churn, contraction, and expansion in money rather than customer counts;
- forecasting and setting budgets;
- lending and valuation conversations. SaaS Capital, a lender to B2B SaaS companies, states in its 2025 retention research brief that its credit availability is typically based on a multiple of MRR, which shows how directly the metric can matter in financing.
MRR is a management metric. It is not a GAAP figure, not a cash balance, and not profit.
The MRR formula
At its simplest:
MRR = sum of (recurring price per subscription ÷ months in its billing interval)
For a business where every customer pays the same monthly price:
MRR = number of paying customers × monthly price
And once you know MRR and the number of paying accounts:
ARPA = MRR ÷ active paying accounts
ChartMogul's SaaS metrics cheat sheet describes MRR as normalized (amortized) monthly subscription revenue and calculates it per subscription item as the amount paid divided by the number of months in the plan interval. Stripe's Billing analytics documentation defines MRR as the sum of the monthly-normalized value of active and past-due subscriptions, excluding taxes, free plans, and metered usage products. Stripe's own example: 100 subscribers on a $100 monthly plan and 50 subscribers on a $600 annual plan produce:
(100 × $100) + (50 × $600 ÷ 12) = $10,000 + $2,500 = $12,500 MRR
A worked example from a subscriber list
Suppose a small SaaS tool has the following on October 31:
- Starter: $19 per month, 120 active subscribers;
- Pro: $49 per month, 60 active subscribers;
- Pro annual: $470 per year, 30 active subscribers;
- Team: $1,500 per quarter, 4 active subscribers.
It also has five customers on a free trial, two customers who paid a $300 one-time onboarding fee this month, and one customer who bought a $199 lifetime deal.
Step by step:
- Starter:
120 × $19 = $2,280 - Pro monthly:
60 × $49 = $2,940 - Pro annual:
30 × ($470 ÷ 12) = 30 × $39.17 = $1,175 - Team quarterly:
4 × ($1,500 ÷ 3) = 4 × $500 = $2,000
MRR = $2,280 + $2,940 + $1,175 + $2,000 = $8,395
Excluded: the trials (no paid subscription yet), the $600 of onboarding fees (one-time), and the $199 lifetime deal (not recurring). Paying accounts total 214, so:
ARPA = $8,395 ÷ 214 ≈ $39.23
Now compare cash. If 10 of the annual customers renewed this month, the business collected 10 × $470 = $4,700 from annual plans alone, plus the onboarding fees and the lifetime deal. Cash for the month could easily exceed $11,000 while MRR stays at $8,395. Neither number is wrong; they answer different questions.
You can check this kind of normalization with the MRR and ARR calculator.
What counts in MRR and what does not
Usually included
- monthly, quarterly, annual, and multi-year subscriptions, each normalized to one month;
- recurring add-ons, extra seats, and higher tiers while they are active;
- recurring discounts, applied consistently (Stripe lets users choose whether recurring and one-time discounts are subtracted from MRR, according to its analytics documentation);
- committed recurring minimums in usage-based contracts, if your written policy treats them as recurring.
Usually excluded
- free plans and unconverted trials;
- setup, onboarding, and implementation fees;
- one-time purchases, consumables, and lifetime deals;
- professional services;
- sales tax and VAT;
- uncommitted usage charges, unless you report them separately as usage revenue.
Mobile apps follow the same logic. RevenueCat's MRR chart documentation spreads an annual plan over twelve months, so a $120 yearly plan counts as $10 per month, and excludes non-recurring, consumable, and one-time purchases. It also offers views net of estimated store taxes and commission, which is another reminder that "MRR" can be quoted gross or net of fees.
How MRR changes from month to month
Because MRR is a snapshot, the interesting question is usually what moved it. The standard movement categories are new, expansion, reactivation, contraction, and churned MRR:
Ending MRR = Starting MRR + New + Expansion + Reactivation − Contraction − Churn
The month-over-month growth rate is then:
MRR growth rate = (Ending MRR − Starting MRR) ÷ Starting MRR
Example: starting MRR of $8,395, $900 new, $150 expansion, $60 contraction, and $420 churned gives an ending MRR of $8,395 + $900 + $150 − $60 − $420 = $8,965, a growth rate of $570 ÷ $8,395 ≈ 6.8%.
The full waterfall, including foreign exchange and reconciliation to cash, is covered in MRR vs ARR. For churn specifically, see how to calculate churn rate, and for growth efficiency, the SaaS quick ratio.
Status decisions that change MRR
The same subscriber list can produce different MRR depending on a few policy choices. Decide these once, write them down, and apply them every month:
- Past-due subscriptions. Stripe keeps past-due subscriptions in MRR and removes them when they become canceled or unpaid. Another tool may drop them sooner.
- Scheduled cancellations. A customer who has canceled but whose paid term has not ended is commonly still counted until the term ends.
- Trials. Stripe excludes trialing items; a business that counts trials will report a higher, less meaningful number.
- Paused subscriptions. Treat a pause as contraction or churn, not as active revenue.
- Currency. Convert at a documented rate and source; show the FX effect separately.
MRR for buyers and on RevenueBug
Buyers use MRR to judge the size and durability of a recurring revenue base, then test it against cohorts, churn, and margins. A clean MRR schedule—customer by customer, with plan, interval, status, and normalized value—lets a buyer reproduce the number instead of trusting a screenshot.
RevenueBug's public headline figure is different. It is trailing 30-day revenue calculated from a connected payment provider's data: successful payments minus refunds and disputes, before provider fees. That figure can include annual prepayments and one-time sales, so it is not necessarily subscription MRR. The methodology explains the measurement in detail. "Verified" there means the number was calculated from provider data; it is not an audit, proof of profit, or a valuation.
If you run a subscription product, the most useful pairing is a public verified-revenue profile plus your own MRR schedule that explains the difference. You can add your startup or browse other startup profiles to see how revenue is presented.
Common MRR mistakes
Booking annual cash as MRR. The single most common error. A $2,400 annual contract is $200 of MRR.
Counting one-time revenue. Setup fees and lifetime deals inflate MRR and then disappear, which later looks like churn.
Including trials or free plans. They have no recurring price yet.
Annualizing a good month. Multiplying a cash-heavy month by 12 produces a run rate, not recurring revenue.
Changing definitions quietly. Switching discount or past-due treatment creates a jump that looks like growth. Restate history or label the break.
Mixing gross and net of fees. App store MRR net of commission is not comparable with web MRR before processor fees.
Frequently asked questions
What is MRR in simple terms?
MRR is the amount of subscription revenue a business would bring in during a typical month based on the subscriptions active today, with annual and quarterly plans converted to monthly amounts.
Is MRR the same as monthly revenue?
No. Monthly revenue usually means what was collected or recognized in a calendar month and can include annual prepayments, one-time sales, and services. MRR only includes normalized recurring subscription value.
How do I calculate MRR for annual plans?
Divide the annual price by 12. A $600 yearly plan contributes $50 of MRR for each month it is active.
Should MRR include discounts?
It can be reported either way, but be consistent and say which. Subtracting recurring discounts is the more conservative choice because it reflects what customers actually pay.
Do one-time payments ever count toward MRR?
No. Track them separately. They still matter for cash flow and for trailing revenue figures such as RevenueBug's 30-day headline, but they are not recurring.
What is a good MRR growth rate?
It depends on stage, price point, and market, so there is no single target. Compare your rate with your own history and with cohort retention; a high growth rate built on heavy churn is less durable than slower growth with strong retention. See SaaS churn benchmarks for retention context.