Monthly Recurring Revenue (MRR)

MRR

Monthly Recurring Revenue (MRR) is the predictable, normalized revenue a SaaS business earns each month from active subscriptions. It strips out one-time payments and annual contract noise to give you a clean pulse of subscription health. MRR is the single number most SaaS founders track daily.

formula.sh

MRR = Σ (active subscribers × monthly plan price)

> Active subscribers: all paying customers whose subscription has not lapsed
> Monthly plan price: normalized price (annual plans ÷ 12)
> Sum across all plans and tiers

example

example.sh

You have 80 customers on a $49/mo plan and 20 on a $99/mo plan.

(80 × $49) + (20 × $99) = $3,920 + $1,980

→ $5,900 MRR

why it matters

MRR is the heartbeat metric of any subscription business. It removes the lumpy nature of annual billing and one-time fees so you can see a consistent signal month over month. Investors, acquirers, and operators all anchor valuations to MRR multiples.

More importantly, decomposing MRR into its components — new, expansion, contraction, and churned — tells you exactly where growth is coming from and where it is leaking. A flat MRR can hide a healthy new-MRR engine that is being neutralized by churn. You need the breakdown.

common mistakes

✗Including one-time setup fees or professional services in MRR — these are not recurring

✗Forgetting to normalize annual plans by dividing by 12

✗Counting trials or freemium users as if they were paying subscribers

pro tips

✓Track MRR movement daily in a simple spreadsheet: new + expansion − contraction − churn = net new MRR

✓Set a MRR goal that maps to a specific ARR milestone so your team knows what "winning the month" looks like

✓Use MRR cohort analysis to see whether each month's new cohort retains revenue better than the last

the mrrsucks take

Your MRR would make a solid hobby income if your hobby was losing money. You refresh the Stripe dashboard like it owes you an apology, but the number just sits there, judging you back.

faq

What is the difference between MRR and ARR?+

MRR is your monthly snapshot; ARR is MRR × 12. ARR is used for annual planning and investor conversations. MRR is used for operational monitoring.

Should I include annual plan revenue in MRR?+

Yes, but normalized. Divide the annual contract value by 12 and count only that monthly slice. Do not book the full annual amount in month one.

What is a good MRR growth rate for early-stage SaaS?+

Pre-product-market-fit, 10–20% MoM is strong. Post-PMF, 5–10% MoM sustained is healthy. Below 3% MoM at scale typically signals a growth problem.

The $0 MRR milestone›Zero revenue roasts›

related metrics

./install-the-daemon

$9. 365 roasts. one public endpoint of pure shame.