Monthly Recurring Revenue (MRR)
The predictable revenue a subscription business earns every month from all active subscriptions, normalized to a monthly amount.
Also known as: MRR
Formula
Sum of (Monthly Subscription Value) for all active customers
Why It Matters
MRR is the heartbeat of every subscription business. It tells you how much predictable revenue you can count on each month, making it the foundation for forecasting, budgeting, and valuation.
Unlike total revenue, MRR strips out one-time charges and normalizes annual contracts to monthly amounts, giving you a clean view of your recurring revenue engine. Investors use MRR growth rate as a primary indicator of business health.
How to Calculate
Sum the monthly value of all active subscriptions. For annual plans, divide the annual amount by 12. Exclude one-time fees, setup charges, and usage-based overages that are not guaranteed to recur.
Monthly Recurring Revenue Calculator
Sum of (Monthly Subscription Value) for all active customers
Industry Applications
A B2B SaaS tool with 500 customers on $49/mo and 100 on $199/mo has an MRR of $44,400. Tracking MRR by plan tier reveals which segment drives growth.
Benchmark: $10K-$100K for seed-stage, $100K-$1M for Series A
Industry Benchmarks
Healthy SaaS companies grow MRR at 10-20% month-over-month in early stages, settling to 5-10% as they scale. Enterprise SaaS typically has higher MRR per account but slower growth rates than self-serve products.
How to Track in KISSmetrics
Set up a revenue event in KISSmetrics that fires on each subscription payment. Use properties to tag plan type, billing interval, and amount. The Revenue Report shows MRR trends over time and lets you break down by cohort or acquisition channel.
Common Mistakes
- -Including one-time setup fees or professional services revenue in MRR
- -Not normalizing annual contracts to monthly amounts
- -Counting churned customers who have not yet reached the end of their billing period
- -Ignoring the difference between contracted MRR and collected MRR
Pro Tips
- +Break MRR into components: New MRR, Expansion MRR, Contraction MRR, and Churned MRR for a complete picture
- +Track MRR by acquisition channel to understand which sources drive the most valuable customers
- +Compare MRR growth rate to customer count growth to spot pricing optimization opportunities
Related Terms
Annual Recurring Revenue (ARR)
The annualized value of recurring subscription revenue, calculated as MRR multiplied by 12. The standard metric for measuring SaaS business scale.
Churn Rate
The percentage of customers or revenue lost over a given period. Customer churn measures account losses; revenue churn measures dollar losses.
Net Dollar Retention (NDR)
The percentage of recurring revenue retained from existing customers after accounting for expansion, contraction, and churn. Above 100% means existing customers generate more revenue over time.
Expansion Revenue
Expansion revenue is additional recurring revenue generated from existing customers through upsells, cross-sells, seat additions, or increased usage. It is the primary driver of net revenue retention above 100%.
See Monthly Recurring Revenue (MRR) in action
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