Finance
MRR (Monthly Recurring Revenue)
The predictable revenue a business expects to receive every month from active subscriptions, normalised to a monthly amount.
By Maya Okonkwo · Last updated May 21, 2026
In plain English
What you'd bill this month if every paying customer stayed exactly the same. The North Star of any subscription business.
Example
20 customers on $50/mo plans + 5 customers on $200/mo annual plans (billed $2,400/year = $200/mo equivalent) = $1,000 + $1,000 = $2,000 MRR.
Formula
MRR = Σ (active subscription value normalised to a monthly cadence) Annual plans count as (annual price / 12). One-off purchases and usage spikes do NOT count.
Why it matters
MRR turns lumpy revenue into a smooth line that compounds. Growth rate of MRR is the single best predictor of valuation in SaaS. Investors price you off it; founders manage to it.
Common mistakes
- Counting one-off setup fees, professional services, or overages in MRR
- Forgetting to remove churned and paused subscriptions
- Annualising MRR by ×12 and calling it ARR before accounting for churn