Monthly Recurring Revenue (MRR)

MRR provides a clear, time‑boxed view of recurring revenue that decision‑makers can trust. Beyond a simple total, it communicates how durable your revenue base is and whether your commercial motion compounds month over month.

Monthly Recurring Revenue is predictable subscription revenue recognized for a calendar month. Excludes one‑time charges and accounts for prorations from upgrades or downgrades.

Interpreting MRR well means separating the drivers: new business, expansion, contraction, and churn. Tracking these components highlights whether growth is coming from adding logos, growing existing accounts, or masking losses.

Monthly Recurring Revenue is the predictable revenue you recognize in a calendar month from active subscriptions. It excludes one‑time fees, setup charges, and non‑recurring items. Treat upgrades and downgrades with proration so the month reflects the true service delivered. Teams use MRR to measure momentum, forecast cash, and track net changes from new sales, expansion, contraction, and churn. Stable, cleanly recognized MRR gives you a reliable baseline to plan hiring and marketing budgets.

MRR is the sum of all active monthly subscription revenue.

While MRR is often presented as a straightforward sum, accurate recognition depends on proration for mid‑cycle changes and excluding non‑recurring items. This ensures the figure reflects service actually delivered in the month.

50 customers paying $40 → $2,000 MRR.

The example illustrates clean monthly recognition. In practice, real‑world MRR includes partial periods, add‑ons, and seat changes, all of which should be prorated so the recognized amount matches usage.

Common mistakes stem from mixing one‑time revenue with recurring, ignoring proration, and failing to separate paid subscribers from trials. Each issue can materially overstate momentum and mislead planning.

Early‑stage: $10k–$100k MRR; growth: $100k–$1M; enterprise: $1M+ (varies by niche).

Use benchmarks as directional context, not targets. Healthy MRR varies by segment, ACV, and go‑to‑market model. Trend, cleanliness, and net movement are more informative than absolute size.

Operational teams benefit from reporting net MRR (new + expansion − contraction − churn) and reconciling it to billing ledgers monthly. This keeps finance and growth teams aligned on the same source of truth.

MRR connects directly to ARR (annualized view), ARPU (value per account), and NRR (durability within the existing base). Together these metrics describe scale, unit value, and cohort health.