MRR: definition
Monthly Recurring Revenue: the predictable subscription revenue you collect every month.
By Mathéo Ballasse · May 21, 2026
Definition
MRR (Monthly Recurring Revenue) is the sum of all your subscriptions brought back to a monthly figure. It is the king metric of a SaaS business because it is predictable: it goes up with new customers and upgrades, it goes down with churn and downgrades. Tracking net MRR (new minus lost) tells you whether your growth is real.
How to calculate it
MRR = sum of all active monthly subscriptions (annual plans brought back to a monthly figure)
Why it matters
MRR turns an uncertain business into revenue you can project and make decisions on (hiring, spending on acquisition). Breaking it down (new, expansion, churned) shows you where your growth actually comes from, or why it stalls despite new customers.
When to use it
You track it every month, broken down into new MRR, expansion MRR, and lost MRR. In practice, MRR that climbs from new sales alone but gets eaten away by churn is a warning sign: you are bailing out a leaking bucket.
Example
40 customers at $50 a month make $2,000 in MRR, or $24,000 in ARR.
Common mistakes
- Including one-off revenue (setup fees, services) in it.
- Looking at gross MRR while ignoring churn.
- Counting an annual commitment all at once instead of spreading it out.
Don't confuse it with
- arr: ARR is simply MRR multiplied by 12: the same figure viewed on a yearly basis.
Related terms
Articles that use this term
Frequently asked questions
- How do you calculate your MRR?
- Add up the monthly amount of all your active subscriptions; bring annual plans back to a monthly figure (annual divided by 12).