Monthly Recurring Revenue(MRR)
The predictable revenue a subscription business expects to receive each month from all active subscriptions, the key metric for measuring subscription business health.
What is MRR?
Monthly Recurring Revenue (MRR) is the total predictable revenue that a subscription business expects to receive each month. It's calculated by summing the monthly-normalized subscription value of all active customers. For annual subscriptions, the total is divided by 12 to get the monthly equivalent.
MRR is the foundational metric for subscription and SaaS businesses because it represents predictable, repeatable revenue rather than one-time sales. Investors, analysts, and business operators use MRR to evaluate business health, forecast future revenue, and make strategic decisions about growth and resource allocation.
MRR is typically broken down into components: New MRR (from new customers), Expansion MRR (from upgrades and add-ons), Contraction MRR (from downgrades), and Churned MRR (from cancellations). Net New MRR equals New + Expansion - Contraction - Churned, showing whether the business is growing or shrinking.
A healthy subscription business aims for positive Net New MRR with low churn. The best businesses achieve negative net revenue churn—where expansion revenue from existing customers exceeds revenue lost to cancellations. This means the customer base grows in value even without acquiring new customers.
Key MRR Concepts
- New MRR: Revenue from newly acquired customers
- Expansion MRR: Revenue from upgrades and add-ons
- Contraction MRR: Revenue lost to downgrades
- Churned MRR: Revenue lost to cancellations
- Net New MRR: New + Expansion - Contraction - Churned
- ARR = MRR × 12 (Annual Recurring Revenue)
Real-World Examples
See how MRR works in subscription businesses.
SaaS Business
A software company has 500 customers: 300 on €29/mo and 200 on €99/mo. MRR = (300 × €29) + (200 × €99) = €28,500/month.
Annual Plan Conversion
A customer pays €588/year for an annual plan. Their MRR contribution is €588 ÷ 12 = €49/month, normalized for monthly tracking.
Expansion Revenue
10 customers upgrade from €29 to €99 plans. Expansion MRR = 10 × (€99 - €29) = €700. This partially offsets churned customers.
Churn Impact
5 customers paying €99/mo cancel. Churned MRR = €495. If Net New MRR is positive despite this, the business is still growing.
Membership Site
A content creator has 1,200 members at €9/mo. MRR = €10,800. They target 5% monthly growth through content marketing.
Investor Reporting
A startup reports $150K MRR growing 10% month-over-month. Investors calculate ARR of $1.8M and project future growth trajectories.
Track MRR with PayRequest
PayRequest provides built-in subscription analytics, making it easy to track MRR, churn, and growth metrics for your recurring revenue business.
Real-Time MRR Tracking
See your current MRR at a glance. PayRequest automatically calculates total recurring revenue from all active subscriptions.
MRR Components
Track New, Expansion, Contraction, and Churned MRR separately. Understand what's driving your revenue growth or decline.
Subscription Management
Create and manage subscription plans easily. Handle upgrades, downgrades, and cancellations with automatic MRR updates.
Revenue Forecasting
Project future MRR based on current trends. Plan resource allocation with confidence in your recurring revenue.
Related PayRequest Features
Features for managing recurring revenue.
Related Glossary Terms
Build and track MRR with PayRequest
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