monthly recurring revenue (MRR)
MRR is the measure of the total predictable and recurring income that a company expects to generate from its active subscriptions in a given month. It normalizes all subscription terms (monthly, quarterly, annual, etc.) into a consistent monthly figure, making it the financial heartbeat for subscription-based businesses.
The simplest way to calculate MRR is:
MRR = Total Number of Paying Customers * Average Revenue Per User (ARPU) Per Month
There is also Net New NRR:
Net New MRR = (New MRR + Expansion MRR + Reactivated MRR)- (Contraction MRR + Churn MRR)
MRR Type | Definition |
New MRR | Revenue from brand new customers. |
Expansion MRR | Additional revenue from existing customers (upgrades, add-ons). |
Reactivation MRR | Revenue from former customers who re-subscribe. |
Contraction MRR | Revenue lost due to existing customers downgrading their plan or removing add-ons. |
Churn MRR | Revenue lost due to customers canceling their subscriptions entirely. |