What is MRR?
MRR (Monthly Recurring Revenue) is the predictable, normalized revenue a subscription business earns each month. It's the single most important metric for SaaS companies because it shows how much revenue you can count on, stripped of one-time charges and billing cycle variations.
How to Calculate MRR
For monthly subscriptions, the MRR is the subscription price. For other intervals:
- Yearly subscriptions: Annual price ÷ 12
- Quarterly subscriptions: Quarterly price ÷ 3
- Weekly subscriptions: Weekly price × 4.33
Calculation Example
Imagine you have 3 customers:
- Customer A: $49/month plan
- Customer B: $588/year plan ($588 ÷ 12 = $49/mo)
- Customer C: $99/month plan
MRR Components
Tracking total MRR is useful, but understanding its components tells you why your revenue is changing:
New MRR
Revenue from brand-new customers who subscribed this month.
Expansion MRR
Additional revenue from existing customers who upgraded or added seats.
Contraction MRR
Lost revenue from existing customers who downgraded their plan.
Churned MRR
Revenue lost from customers who canceled their subscription entirely.
Which Subscriptions Count Toward MRR?
Not every subscription status should be included in your MRR calculation. The industry standard:
- Include:
active,past_due(payment failed but subscription still running) - Exclude:
trialing(no payment yet),canceled,incomplete,unpaid,paused
MRR Benchmarks
MRR growth rates vary by stage, but here are rough benchmarks for SaaS companies:
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