What is Monthly Recurring Revenue (MRR)?
Monthly Recurring Revenue (MRR) is the normalized, contract-based revenue your business earns each month from active subscriptions, after discounts and excluding one-off or usage-based charges.
It gives operators and investors a clean view of predictable cash inflows, underpins ARR, net revenue retention, and LTV:CAC, and is a core input in SaaS valuation and growth planning.
Formula
The standard base formula:
Equivalently, when you track subscription movements as components:
Ending MRR for the period becomes:
Example
A SaaS business starts the month with Previous MRR of $45,000.
During the month it adds $8,000 in New MRR from new customers and $2,000 in Expansion MRR from upgrades and add-ons.
At the same time it loses $1,500 in Churned MRR from cancellations and $1,000 in Contraction MRR from downgrades.
Net New MRR is:
Ending MRR is:
That $52,500 of MRR implies ARR of $630,000, and feeds directly into metrics such as net revenue retention, LTV, and the revenue multiple an acquirer or investor might be willing to pay.