---
title: "MRR (Monthly Recurring Revenue): Definition and Examples"
description: "MRR (monthly recurring revenue) is the predictable subscription revenue a company earns in a month, normalized so annual and quarterly plans count at their..."
path: /glossary/mrr
family: glossary
updated: 2026-10-17
html: /glossary/mrr
sources:
  - "https://stripe.com/gb/resources/more/what-is-monthly-recurring-revenue"
  - "https://www.salesforce.com/blog/sales/monthly-recurring-revenue/"
facts:
  term: "MRR (monthly recurring revenue)"
  also_called: "Monthly recurring revenue"
  category: "Sales"
  formula: "MRR = number of customers x average monthly revenue per customer; Net new MRR = new MRR + expansion MRR - churned MRR - contraction MRR"
---

# MRR (monthly recurring revenue)

MRR (monthly recurring revenue) is the predictable subscription revenue a company earns in a month, normalized so annual and quarterly plans count at their monthly value. It excludes one-time charges and is a core operating metric for SaaS companies.

## What Is MRR (Monthly Recurring Revenue)?

**In short:** MRR is the sum of every active subscription's monthly value, or the number of customers times the average monthly revenue per customer.

A $1,200 annual plan adds $100 of MRR, not $1,200 in the month it's paid. Teams split MRR into movements: new MRR from new customers, expansion MRR from upgrades, contraction MRR from downgrades and churned MRR from cancellations.

MRR gives fast feedback. It moves every month, so you see the effect of a pricing change, a churn spike or a strong outbound quarter within weeks. ARR suits planning and investor reporting; MRR suits running the business month to month.

## MRR Example

Formula

```text
MRR = number of customers x average monthly revenue per customer
Net new MRR = new MRR + expansion MRR - churned MRR - contraction MRR
```

Example: a SaaS company starts March with $50,000 MRR. It adds $6,000 new MRR from 30 customers and $2,000 expansion MRR, and loses $1,500 to churn and $500 to downgrades. Net new MRR is $6,000 + $2,000 - $1,500 - $500 = $6,000, so April starts at $56,000 MRR, 12% month-over-month growth.

## MRR in Practice

Sales and outbound teams use MRR per customer to decide which segments to target. A segment with low MRR per customer needs many deals at a low cost per meeting, which suits high-volume email campaigns. A segment with high MRR per customer can justify account-based outreach with more research per account.

## FAQ

### How do you calculate MRR?

Multiply the number of paying customers by the average monthly revenue per customer, or add up each active subscription's monthly value. Convert annual and quarterly plans to their monthly amount and leave out one-time fees and taxes.

### What is the difference between MRR and ARR?

MRR measures one month of recurring revenue and ARR measures a year. For monthly subscriptions, ARR = MRR x 12.

### What counts as MRR?

Recurring subscription charges from active customers, at their monthly value after discounts. Salesforce excludes one-time fees and taxes, so setup fees and one-off services don't count.

### What are new, expansion and churned MRR?

New MRR comes from customers who started paying this month, expansion MRR from existing customers who upgraded or added seats, and churned MRR is what you lost from cancellations. Contraction MRR covers downgrades.

## Related

- [GTM Glossary](/glossary): Every GTM term, grouped by topic.
- [ARR (annual recurring revenue)](/glossary/arr)
- [Churn rate](/glossary/churn-rate)
- [Net revenue retention (NRR)](/glossary/net-revenue-retention)
- [Customer lifetime value (CLV or LTV)](/glossary/customer-lifetime-value)
- [Customer acquisition cost (CAC)](/glossary/customer-acquisition-cost)
- [Ken features](/features)

## Sources

| Source | URL | Checked |
| --- | --- | --- |
| Stripe: What Is MRR, or Monthly Recurring Revenue? | https://stripe.com/gb/resources/more/what-is-monthly-recurring-revenue | 2026-10-17 |
| Salesforce: What Is Monthly Recurring Revenue (MRR)? | https://www.salesforce.com/blog/sales/monthly-recurring-revenue/ | 2026-10-17 |

## Changelog

- 2026-10-17: Page published.