Monthly recurring revenue (MRR): what it means and how to calculate it

Monthly recurring revenue (MRR) is the subscription revenue a business can count on every month, with every plan normalized to a monthly amount. In business and finance it is the standard measure of a subscription company's size and growth; in sales it is how a new deal is usually scored.

MRR is not the cash that arrived this month. A customer who prepaid $2,400 for a year adds $200 of MRR every month, not $2,400 once.

The MRR formula

MRR = sum over active paying subscriptions of
      (monthly price × quantity − recurring discount)

monthly value of an annual plan    = annual price / 12
monthly value of a quarterly plan  = quarterly price / 3

Net new MRR = new + expansion − contraction − churned

Leave out trials, one-time charges, taxes and usage overages. Include past-due subscriptions only if you have decided to, and do the same every time.

A worked MRR example

On 30 September a product has these paying customers:

On 1 September MRR was $9,250. During the month:

$9,250 + $586 = $9,836, which matches the bottom-up count. That check is the most useful habit in MRR reporting: when the movements don't add up to the change, a plan switch was probably counted as a cancel and a new sign-up.

What MRR means in sales and in finance

• In sales, reps and quotas are often measured in new MRR, because it values a $1,200 yearly deal and a $100 monthly deal the same: $100 a month. It stops a big prepayment from looking like a bigger customer.
• In finance, MRR drives forecasts, runway models and valuation. It is a management metric, not accounting revenue: your income statement still recognizes revenue over the service period under your accounting rules, and includes the non-recurring parts MRR leaves out.
• In business generally, founders use MRR growth month over month as the headline for how the company is doing, and split it into the four movements to explain why.

Common MRR mistakes

• Booking annual payments in one month. A $2,400 annual plan is $200 a month, not a $2,400 spike followed by eleven empty months.
• Counting trials. A trial becomes MRR when the first payment succeeds, and that conversion counts as new MRR.
• Including one-time fees, taxes or metered usage. None of them repeat on a schedule.
• Forgetting discounts end. When a three-month coupon runs out, the customer pays full price from that date, and the difference shows up as expansion.
• Converting currencies at daily rates. The number moves while no customer did anything. Use one rate per report.
• Treating failed payments as churn on day one. Many are recovered by retries; decide when a failed payment becomes churn.

Related metrics

• Annual recurring revenue: MRR times 12, the investor-facing version.
• Churn: customer and revenue churn, the losses side of net new MRR.
• Net revenue retention: what your existing customers' MRR did over a year.
• ARPU: MRR divided by paying accounts.

Track MRR automatically every week

The Stripe weekly MRR report skill does the bottom-up count every Monday from live Stripe subscriptions: monthly normalization, discounts applied, trials and metered prices left out, past-due kept until canceled. It then reads the week's subscription events, splits net new MRR into new, expansion, contraction and churn, and flags it when last week plus net new doesn't match this week within 1%.

Run it with your own agent on a schedule and the result lands as one metric card on your Briefkin board, with the history drawn as a chart. If you want MRR next to traffic and weekly active users, weekly founder metrics puts all three on one card.