Monthly Recurring Revenue (MRR)

What is monthly recurring revenue?‍

Monthly recurring revenue (MRR) is the predictable income a business generates each month from active subscriptions and other recurring charges. Unlike one-time fees or ad-hoc payments, MRR reflects stable subscription revenue that can be relied on as a foundation for forecasting and growth.

Why MRR matters

• Revenue predictability: MRR creates a stable baseline for financial planning and budgeting.
  
• Growth tracking: Increases or declines in MRR reveal momentum in new sales, churn, upgrades, or downgrades.
  
• Decision-making confidence: A clear view of MRR enables leadership to set goals, evaluate acquisition strategies, and optimize retention programs.
  

How to calculate MRR‍

There are several common approaches:

• By customer count: MRR = Number of active customers × Average monthly revenue per account (ARPA).
  
• By revenue events: MRR = (Recurring subscription revenue + recurring add-ons): revenue lost from churn or downgrades.
  
• From ARR: If you track Annual Recurring Revenue (ARR), MRR can be approximated as MRR = ARR ÷ 12.
  

Inclusions and exclusions

• Include: Subscription charges, recurring add-ons, predictable renewals.
  
• Exclude: One-time setup fees, consulting services, and non-recurring purchases.
  

MRR in subscription businesses‍

For consumer subscription companies, MRR is a key operating metric that reflects the ongoing relationship with subscribers. It gives commercial teams a live pulse of how acquisition, retention, and pricing strategies impact financial performance month by month. Subsets helps businesses strengthen MRR by reducing churn risk, identifying upsell opportunities, and automating interventions that secure consistent revenue growth.