What is monthly recurring revenue?
Monthly recurring revenue, or MRR, is the predictable subscription revenue your customers pay each month. It excludes one-time fees and usage spikes, so it reflects the revenue you can count on.
MRR is the base metric of a subscription business. ARR, growth rate, and retention all build on it.
The MRR formula.
The simplest version: MRR = number of customers times average revenue per account per month. If you know your ARR, MRR is just ARR divided by 12.
Count only recurring revenue. Setup fees, one-off services, and overages are not MRR, because they do not repeat.
A worked example.
You have 200 customers paying an average of 500 dollars a month. MRR is 200 times 500, which is 100,000 dollars. That is 1.2 million dollars of ARR.
What counts toward MRR?
Recurring subscription revenue only. Normalize annual plans to a monthly figure, so a 6,000 dollar annual contract counts as 500 dollars of MRR. Exclude one-time fees, professional services, and variable usage that you cannot predict.
Track the movement in MRR, not just the total: new, expansion, contraction, and churned. The net of those is what tells you whether the base is growing.
How to grow your MRR.
Three ways: add customers, raise revenue per account, or lose fewer of them. Most teams focus on the first and ignore the third, which is usually cheaper.
Organic search adds customers without a per-click cost, so it grows MRR efficiently. See how we build B2B SaaS pipeline.