MRR
This is the quick definition. For the complete guide, read our full guide to monthly recurring revenue.
What is MRR?
MRR, or monthly recurring revenue, is the predictable revenue a subscription business collects each month from its active, paying customers. It only counts revenue expected to repeat next month, so a one-time sale or setup fee never counts toward it.
The MRR formula
MRR = number of paying customers x average revenue per customer
Add up the recurring revenue from every active subscription or membership in a given month, and the result is that month's MRR. One-time charges and setup fees are left out because they will not repeat.
Worked example for a subscription seller
A coach runs a membership program with three pricing tiers: Basic, Plus, and Pro.
| Tier | Members | Price | Revenue |
|---|---|---|---|
| Basic | 40 | $15 | $600 |
| Plus | 25 | $35 | $875 |
| Pro | 10 | $75 | $750 |
| Total MRR | 75 | $2,225 |
That $2,225 is the coach's MRR for the month: what the business can reasonably expect to collect again next month if nothing changes.
MRR vs ARR
ARR, annual recurring revenue, is simply MRR multiplied by twelve. The two describe the same underlying revenue at different time scales: MRR suits month to month tracking and short term decisions, since it reacts quickly to new signups or cancellations, while ARR suits longer range planning and investor reporting, where a monthly figure is too granular to be useful. Neither is more accurate than the other; they answer different questions.
What moves MRR up or down
MRR changes for three basic reasons:
- New MRR: new customers signing up.
- Expansion MRR: existing customers upgrading to a higher tier or adding more.
- Lost MRR: cancellations, downgrades, and failed payments that dunning never manages to recover, sometimes called churn.
Tracking these three separately, instead of just the net total, shows whether growth is coming from new demand or from getting more out of existing customers, and whether losses are a cancellation problem or a payment recovery problem.
Why MRR matters for subscription and membership sellers
For a subscription or membership business, MRR is usually the clearest health signal available: it reflects revenue that is actually likely to repeat, not a one time spike from a good week. A rising number means the business is growing; a dropping one is worth investigating immediately, before it shows up as a smaller bank deposit.
Tracking MRR on Checkout Page
Checkout Page runs subscriptions and memberships as tiered plans on top of subscription billing and recurring billing. The underlying data needed to calculate MRR, active subscriptions, their price, and their billing cycle, lives on the platform itself, not a separate accounting tool.
Frequently asked questions
- Is MRR the same as total revenue?
- No. Total revenue includes everything a business collects in a month, including one time purchases and setup fees. MRR only counts the recurring, predictable portion from active subscriptions and memberships.
- Does MRR include one-time payments?
- No. A one time payment does not repeat, so it is excluded from MRR by definition. Only revenue expected to recur on a subscription or membership schedule counts.
- How often should MRR be recalculated?
- Monthly, in line with the metric itself. Most subscription businesses recalculate MRR at the start of each billing cycle or with each new, upgraded, downgraded, or cancelled subscription, so the figure stays current rather than lagging behind actual account changes.
Related terms
On Checkout Page
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