How do you calculate MRR?

MRR = Number of Active Subscribers × Average Revenue per Account. A SaaS product with 250 subscribers paying an average of $49/month has an MRR of 250 × $49 = $12,250.

What is the difference between MRR and ARR?

ARR (Annual Recurring Revenue) is simply MRR × 12. MRR is used for month-to-month tracking of a growing or shrinking business, while ARR is the more common figure quoted to investors since it frames the business at an annual scale.

What are New, Expansion, Contraction, and Churned MRR?

These four categories make up the 'MRR bridge' that explains month-over-month movement: New MRR comes from brand-new customers, Expansion MRR from upgrades by existing customers, Contraction MRR from downgrades, and Churned MRR from canceled subscriptions. Ending MRR = Starting MRR + New + Expansion − Contraction − Churned.

MRR Calculator

(Monthly Recurring Revenue Tool)

Calculate your current Monthly Recurring Revenue from subscribers and average price, project ARR, and optionally break down the month's new, expansion, contraction, and churned MRR.

Step 1 — Current Subscriber Base

Active Paying Subscribers

Average Revenue per Account ($/mo)

Blended average across all your plan tiers

Calculated Results

Enter your subscriber count and average revenue per account to calculate MRR.

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MRR Is the Core Metric of Any Subscription Business

Monthly Recurring Revenue reduces a subscription business down to one predictable number — how much revenue repeats every single month regardless of new sales. Unlike one-time revenue, MRR compounds: this month's ending MRR becomes next month's starting point, which is exactly why the four components of MRR movement (new, expansion, contraction, churn) matter as much as the total itself.

MRR = Active Subscribers × Average Revenue per Account

The MRR Bridge, Explained

New MRR: revenue from customers who signed up this month.
Expansion MRR: existing customers upgrading to a higher plan or adding seats.
Contraction MRR: existing customers downgrading.
Churned MRR: revenue lost entirely from cancellations.

Together: Ending MRR = Starting MRR + New + Expansion − Contraction − Churned. See our Net Revenue Retention Calculator if you want to isolate how the existing customer base alone is trending, without new sales in the mix.

Frequently Asked Questions (FAQ)

Yes, but their annual payment should be divided by 12 to normalize it into a monthly figure before including it — otherwise a single annual invoice would spike one month's MRR without reflecting the real recurring run-rate.

It's a reasonable quick estimate for internal tracking, but investors typically want ARR built from actual contract values and committed terms rather than a straight 12× multiple of a single month's snapshot, especially for businesses with seasonal or lumpy MRR.