Monthly Recurring Revenue (MRR)

MRR is the total predictable revenue your business generates from active subscriptions in a given month. It's the foundational SaaS metric. Everything else, ARR, LTV, growth rate, builds on top of it.

How to calculate MRR

Multiply your active subscribers by the average revenue per account. 200 customers at $49/month means your MRR is $9,800. Simple.

If you have multiple pricing tiers, sum the monthly value of each active subscription. For annual plans, divide by 12 to normalise to a monthly figure. Most analytics tools (Stripe, Baremetrics, ChurnWard) handle this automatically.

MRR movements

Tracking how MRR changes month to month tells you where your business is actually heading. New MRR comes from new customers. Expansion MRR comes from upgrades and add-ons.

• Contraction MRR: revenue lost from downgrades
• Churned MRR: revenue lost from cancellations and failed payments

Here's the thing: a chunk of your churned MRR is probably involuntary, caused by payment failures rather than deliberate cancellations. That portion is recoverable through dunning, which makes it one of the most actionable numbers on your dashboard.

MRR churn

MRR churn is the dollar amount of recurring revenue you lose in a given month. Not a percentage, the actual dollars. If three customers on $49/month plans cancel and two payments fail on $99/month plans, your MRR churn is $345.

Don't confuse it with revenue churn rate, which expresses that loss as a percentage of your starting MRR. Both matter, but MRR churn in absolute terms is what you'll feel in your bank account. A 3% churn rate sounds manageable until you realise it's $15,000/month walking out the door.

The recoverable portion is what makes this metric actionable. Failed payments account for 20 to 40% of MRR churn across most SaaS businesses. That's revenue from customers who didn't choose to leave. Recovering it through dunning is the fastest way to reduce MRR churn without changing your product or pricing.