Monthly recurring revenue (MRR) is the predictable monthly income a business earns from active subscriptions. The formula: multiply your average revenue per user by the number of active paying subscribers. If a paid newsletter has 80 subscribers at $12 a month, MRR is $960. Quick note: if you searched "MRR meaning" thinking about Master Resell Rights, the digital-product licensing model, that's a different MRR entirely. This article covers recurring revenue, the subscription metric.
What is MRR?
Monthly recurring revenue is the income your business can expect from active subscriptions in a given month. It excludes one-time charges, setup fees, refunds, and taxes. Subscription businesses track it instead of total revenue because it's the part of the income that repeats.
Most billing dashboards split MRR into five components:
- New MRR: revenue added this month from new subscribers.
- Expansion MRR: extra revenue from existing customers upgrading their plan, adding seats, or buying add-ons.
- Reactivation MRR: revenue from previously churned customers who came back.
- Contraction MRR: revenue lost when existing customers downgrade or remove seats.
- Churned MRR: revenue lost when customers cancel.
Add up new, expansion, and reactivation; subtract contraction and churned. The result is your net new MRR for the month, and it tells you whether the subscription side of the business grew or shrank.
The MRR formula (with a worked example)
The MRR formula in plain prose:
MRR = average revenue per user (ARPU) × number of active paying subscribers.
That version works when every customer pays the same. If you have a mix of plans, sum the monthly recurring charge across every active subscription instead:
MRR = the sum of every active subscription's monthly recurring charge.
Annual plans get normalised. Divide the annual price by 12 and add the monthly equivalent to the total. One-time charges, setup fees, taxes, and refunds don't count toward MRR.
Worked example: a paid-newsletter creator
A paid newsletter runs on Substack-style pricing: $10 a month or $96 a year. At the end of the month, the creator has:
- 180 monthly subscribers paying $10 → $1,800 MRR
- 40 annual subscribers paying $96/year → 40 × ($96 / 12) = $320 MRR
Total MRR: $2,120.
Worked example: a course-membership business
A course creator runs a recurring membership at $49 a month with a discounted annual plan at $470. End-of-month subscribers:
- 50 monthly members at $49 → $2,450 MRR
- 25 annual members at $470/year → 25 × ($470 / 12) = $979 MRR
Total MRR: $3,429.
Worked example: a small SaaS business
A small SaaS sells three plans: Starter at $29, Pro at $79, and Team at $199. Active subscriptions at the end of the month:
- 40 Starter × $29 = $1,160
- 25 Pro × $79 = $1,975
- 8 Team × $199 = $1,592
Total MRR: $4,727.
The pattern is the same in all three: list every active subscription, normalise annual plans to a monthly equivalent, and add.
MRR vs ARR vs revenue run rate
MRR, ARR, and revenue run rate get used interchangeably, but they aren't the same number.
- MRR
- Calculation: Sum of monthly recurring charges across all active subscriptions
- What it measures: Month-to-month recurring income
- Use this if...: You're tracking growth, churn, and product-market fit in short cycles
- What it doesn't tell you: Anything about one-time fees, usage spikes, or seasonal patterns
- ARR
- Calculation: MRR × 12, or sum of annualised contract values
- What it measures: Annual recurring income — the headline finance number
- Use this if...: You're reporting to investors, planning a budget year, or pricing on an annual contract
- What it doesn't tell you: Month-by-month volatility; ARR flattens churn and seasonality
- Revenue run rate
- Calculation: Most recent period's total revenue × (12 / period length)
- What it measures: A projection of where annual revenue could land if today's pace holds
- Use this if...: You're modelling a fundraising target or stress-testing a single strong month
- What it doesn't tell you: Anything reliable — run rate ignores churn, seasonality, and one-time spikes
The shortest version: MRR is what you actually earned last month from subscriptions. ARR is that figure annualised. Revenue run rate is a projection that includes any revenue type, recurring or not.
Stripe publishes a longer treatment in Stripe's MRR guide if you want the enterprise-SaaS view.
MRR vs MRR (Master Resell Rights): the disambiguation
If you searched "MRR meaning" expecting a licensing or reselling answer, you're looking for Master Resell Rights — a digital-product licensing model where you buy a product (a course, an ebook, a template pack) along with the rights to resell it under your own name. That MRR has nothing to do with subscription revenue or finance metrics.
This article covers Monthly Recurring Revenue, the subscription metric. For the licensing model, search "master resell rights" or "PLR licensing" instead.
How to calculate MRR step by step
Pull this number once a month, on the same day each month. Most billing dashboards (Stripe Billing included) calculate it for you, but the manual version is worth knowing when you want to sanity-check the platform's math.
- List every active subscription as of the close of the month. "Active" means a subscription that's paying, not trialling, not cancelled, not failed-payment. If you're using Stripe, the dashboard's subscription status filter handles this.
- Normalise annual and quarterly plans to a monthly figure. Divide the annual price by 12. Divide a quarterly price by 3. Add the result to your monthly total. This is the step that's easy to skip, and it's where MRR misreporting usually creeps in.
- Exclude what doesn't count. Drop one-time fees, setup fees, taxes, refunds, credits, and any usage-based charges from the past month. MRR is the recurring portion only.
- Sum every active subscription's monthly recurring charge. This is your gross MRR.
- Subtract churned and contracted MRR from the prior month if you want net new MRR for the month. Add expansion and reactivation MRR if you're tracking growth.
If you're running subscriptions on Stripe and want to handle the billing infrastructure cleanly, the Stripe Billing documentation covers how the platform tracks subscription state for this kind of calculation.
A note on what counts: taxes don't count toward MRR (they're collected on behalf of a tax authority, not earned). Stripe processing fees don't reduce MRR either. MRR is a gross figure, and net revenue is calculated separately by subtracting Stripe processing fees and any other costs.
Common MRR mistakes
Five errors come up over and over with digital sellers calculating MRR for the first time. Each one quietly inflates or deflates the number.
Counting one-time fees as MRR. Setup fees, onboarding charges, and one-off product purchases aren't recurring. They belong in total revenue, not MRR.
Ignoring failed payments. A subscription that just bounced isn't generating revenue this month. If your billing system retries and recovers, fine. If the customer churns out, the MRR is gone. Reconcile failed payments at month-end before reporting MRR.
Much of this is involuntary, so giving subscribers a self-service customer portal to update their payment details helps recover revenue that would otherwise churn.
Mixing gross and net. Gross MRR is the headline figure across all active subscriptions. Net MRR subtracts churned and contracted MRR. Pick one definition and stick to it across months, or your growth trend stops being comparable.
Double-counting upgrades. When a customer moves from a $29 plan to a $79 plan, expansion MRR is $50, not $79. The $29 they were already paying isn't new revenue.
Not separating new MRR from expansion MRR. Both grow the top line. New MRR means you're acquiring customers; expansion MRR means existing customers are paying you more. Combine the two into one number and you can't tell which one is actually moving.
MRR for digital sellers
The math is the same whatever you sell. What changes is the realistic scale and where growth actually comes from.
Paid-newsletter creators. Most paid newsletters sit between $5 and $15 a month, sometimes with an annual discount. MRR scales with subscriber count, so growth comes from more readers, not a higher price. A 500-subscriber newsletter at $8/month is doing $4,000 MRR.
Course-membership businesses. Recurring memberships (rather than one-off course purchases) generate MRR. Membership pricing tends to sit higher per subscriber ($29-$99/month) on smaller subscriber bases. Most new sign-ups come from a free course or webinar funnel.
Subscription boxes. Physical-product subscriptions count toward MRR the same way digital ones do. The catch is that fulfilment costs eat a much bigger share of the revenue, so MRR on its own makes the business look stronger than it is. Net revenue per subscriber is the figure to watch.
Small SaaS founders. MRR is the number SaaS founders give when customers, advisors, or investors ask how it's going. Most indie SaaS businesses spend the first year somewhere in the four-figure monthly band.
In months 1-6, new MRR usually does most of the work. After that, expansion MRR (upgrades, seats, add-ons) takes over.
We process subscription checkouts for paid-newsletter creators, course memberships, subscription boxes, and small SaaS founders running on Stripe.
The most common MRR mistake we see at the Checkout Page level is sellers counting one-time fees (a setup charge or an initial product purchase) into MRR, then being confused when next month's number drops. Track MRR separately from total revenue, and put the one-time charges in the second bucket.
Checkout Page is not an MRR analytics tool like ChartMogul or Baremetrics. We're the checkout that powers the subscriptions feeding your MRR. For per-cohort MRR analysis, churn breakdown, or investor reports, pair Checkout Page with a dedicated analytics tool, or build your own dashboard from Stripe data. Our focus is conversion at the checkout, not retrospective analytics.
If you're setting up a subscription business and want it running cleanly on Stripe, our guide on sell payment plans with Stripe covers the billing infrastructure side.
Take subscriptions on your own site. Checkout Page builds the subscription checkout on Stripe, with no Merchant of Record markup and no per-transaction platform fees. There's a free plan for up to $3,000 in monthly sales, with Checkout Page branding on your pages until you upgrade. See how subscriptions feed your MRR with Checkout Page pricing.
Monthly recurring revenue FAQ
What's a good MRR growth rate?
It depends on stage. Early-stage subscription businesses (under ~$10K MRR) often target 10-20% month-over-month growth. At $10K-$100K MRR, 5-10% month-over-month is more typical.
Past $100K MRR, the figure tends to compress further, with large SaaS companies reporting in the 3-7% monthly range and still growing healthily. These are orientation bands rather than benchmarks; your category and pricing model matter more.
What's the difference between MRR and ARR?
MRR is monthly recurring revenue. ARR is annual recurring revenue — either MRR × 12, or the sum of annualised contract values for businesses that sell annual plans. MRR is the working number for month-to-month tracking. ARR is the reporting number for budgets, board meetings, and investor decks.
How do you calculate MRR for annual plans?
Divide the annual price by 12 and add the result to your MRR total. An annual plan at $1,200 contributes $100 to MRR each month for the duration of the contract. Don't put the full $1,200 in the month the customer paid; that overstates MRR for one month and understates it for the next eleven.
What's MRR churn?
MRR churn is the revenue lost from existing subscriptions in a given month, either because customers cancelled (churned MRR) or downgraded (contracted MRR). Expressed as a percentage, monthly MRR churn rate is churned + contracted MRR divided by MRR at the start of the month. Subscription businesses generally aim for under 5% monthly MRR churn at small scale and under 1-2% at larger scale.
Is MRR the same as recurring revenue?
Not quite. Recurring revenue is the broader category — any revenue that repeats on a schedule. MRR is the specific metric: recurring revenue measured monthly. ARR is the same idea measured annually. If someone says "recurring revenue" without specifying a period, they usually mean MRR.
Is MRR the same as Master Resell Rights?
No. Master Resell Rights (sometimes also abbreviated MRR) is a digital-product licensing model where you buy the right to resell a product as your own. Monthly Recurring Revenue is a finance metric for subscription businesses. The two terms share an acronym and nothing else.
