What is MRR?
Monthly Recurring Revenue – the monthly value of subscription revenue.
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How MRR Works
MRR, or Monthly Recurring Revenue, represents the predictable monthly revenue generated from subscriptions. It's the foundational metric for subscription and SaaS businesses, providing a clear view of business health and growth.
MRR is typically broken into components: New MRR (from new customers), Expansion MRR (from upgrades), Contraction MRR (from downgrades), and Churned MRR (from cancellations). Net MRR growth—the sum of these components—indicates whether your business is growing or contracting. Strong subscription businesses aim for negative churn, where expansion MRR exceeds churned MRR, enabling growth even without new customer acquisition.
Frequently Asked Questions
What is MRR?
Monthly Recurring Revenue – the monthly value of subscription revenue.
MRR, or Monthly Recurring Revenue, represents the predictable monthly revenue generated from subscriptions. It's the foundational metric for subscription and SaaS businesses, providing a clear view of business health and growth.
What does MRR stand for?
Why is MRR important?
MRR provides real-time visibility into subscription business health with much faster feedback loops than annual metrics. Breaking MRR into components (new, expansion, contraction, churn) reveals the engines of growth and identifies problems early. Negative net MRR churn—where existing customers expand faster than others churn—is the holy grail of SaaS growth because it means you can grow even without new customer acquisition.
How do you calculate MRR?
MRR = Sum of all monthly recurring subscription revenue. For example, if you have 50 customers paying $100/month and 20 customers paying $500/month, your MRR is (50 × $100) + (20 × $500) = $5,000 + $10,000 = $15,000.