Monthly Recurring Revenue
Monthly Recurring Revenue (MRR) is the predictable, normalized revenue a subscription business expects to earn each month from its active subscriptions. It strips out one-time fees and annualizes or monthlizes every contract so growth is comparable, making it a core SaaS metric for tracking momentum and forecasting.
MRR is calculated by summing the normalized monthly value of all active subscriptions, an annual plan billed yearly contributes one-twelfth of its value to each month's MRR. Teams break the number into components: new MRR from fresh customers, expansion MRR from upgrades, contraction MRR from downgrades, and churned MRR from cancellations.
A common pitfall is mixing one-time charges, like setup fees, into MRR, which inflates the figure and hides the true recurring base. MRR multiplied by twelve gives ARR, and it pairs naturally with churn rate to gauge net revenue retention.
Last updated: 14 June 2026