MRR
Monthly Recurring Revenue
The total normalized recurring subscription revenue you earn in a given month. It's the heartbeat of your SaaS business, but only if you're calculating it honestly.
You have 200 customers: 150 on $500/month plans and 50 on $2,000/month plans. Your MRR is (150 × $500) + (50 × $2,000) = $175,000. If 10 of those $2k customers are actually on annual contracts paid upfront, the math is the same. You normalize to monthly.
MRR seems simple until you start asking what counts. That $24k annual contract: is it $2k MRR or $24k the month it closes? (It's $2k.) Those implementation fees? Not MRR. That verbal commitment from the prospect who's "definitely signing next week"? Definitely not MRR.
The games people play: counting annual prepayments as one-month spikes, including one-time fees, not removing churned customers until next quarter's "cleanup." Your MRR should be boring and honest. If your investors see a different number than your finance team, you have a problem.
Define ItOther Definitions
“The total normalized recurring subscription revenue earned in a given month, excluding one-time and usage-only charges. Only revenue that recurs by contract belongs in MRR.”
“The predictable revenue a company can expect every month from active subscriptions. The foundation of subscription business health and forecasting.”
“Monthly recurring revenue calculated at the contract or subscription level, incorporating mid-term changes like upgrades and downgrades as they occur.”
“The sum of all recurring subscription revenue normalized to a monthly amount, broken into components: New MRR, Expansion MRR, Churned MRR, and Contraction MRR.”
Everyone agrees: MRR is the sum of monthly recurring subscription revenue. The disagreement is about edge cases, and edge cases are where companies hide problems.
Stripe and Zuora emphasize "recurring by contract." If it's not contracted to repeat, it's not MRR. Maxio focuses on tracking changes at the subscription level. ChurnZero breaks it into components (New, Expansion, Churned, Contraction) which is how you actually diagnose growth.
The key test: if you stopped selling today, would this revenue show up next month? Setup fees fail. Implementation revenue fails. Usage revenue without a committed minimum fails. Annual contracts pass, but only as 1/12th per month, not the lump sum.
MistakesCommon Mistakes
Including one-time setup, onboarding, or implementation fees
Counting full annual prepayments as MRR in the month received
Using list price instead of actual contracted price after discounts
Including free trials or freemium users who haven't converted
Double-counting upgrades (adding new MRR without subtracting old)
MRR growing but revenue feels stuck?
The leak isn't in your MRR formula. It's in how deals convert and expand. We find the bottleneck.
Experience across
