What is Monthly Recurring Revenue (MRR)?
Learn what Monthly Recurring Revenue (MRR) means, why it matters for your marketing strategy, and how consistent content keeps your brand top of mind.
Definition
Monthly recurring revenue (MRR) is the predictable, normalized revenue a subscription business earns each month from active subscribers. The single most.
What is Monthly Recurring Revenue (MRR)?
Monthly recurring revenue (MRR) is the total predictable revenue your subscription business generates from active customers each month. Normalized to exclude one-time charges, discounts, and variable fees.
The basic formula: number of active subscribers Ă— average revenue per subscriber = MRR. A SaaS company with 500 customers paying $100/month has $50,000 MRR. Annual subscriptions get divided by 12 for MRR calculation. A $1,200/year plan contributes $100/month to MRR.
MRR is the heartbeat metric for subscription businesses. Investors, operators, and boards use it to gauge business health. Bessemer Venture Partners calls it the “single most important metric” for SaaS companies, and their Cloud Index tracks MRR growth rates as the primary valuation driver.
Why Does MRR Matter?
MRR turns the chaos of varying subscription plans, billing cycles, and upgrades into one clean number that tells you whether the business is growing, flat, or shrinking.
- Revenue predictability. Unlike one-time sales, MRR tells you what next month’s revenue floor looks like
- Growth tracking. MRR growth rate is the primary metric investors use to value subscription businesses
- Health diagnostics. MRR components (new, expansion, churned, contraction) reveal exactly where growth is coming from or leaking
- Forecasting. With historical MRR data and churn rates, you can project future revenue with reasonable accuracy
A business doing $1M in annual revenue sounds the same whether it’s a SaaS company with $83K MRR or a project-based agency. But their growth trajectories, valuations, and operational stability are completely different.
How MRR Works
MRR has several components that together tell the full growth story.
New MRR
Revenue from brand-new customers acquired this month. If you sign 20 new customers at $99/month, that’s $1,980 in new MRR. This number depends on your sales funnel and lead generation engine.
Expansion MRR
Additional revenue from existing customers who upgrade their plan or add seats/features. This is the most profitable MRR because there’s no customer acquisition cost. Companies with strong net revenue retention grow expansion MRR faster than new MRR.
Churned MRR
Revenue lost from customers who cancel. If 10 customers on $99/month plans leave, that’s $990 in churned MRR. Tracking churned MRR alongside churn rate reveals whether you’re losing high-value or low-value customers.
Net New MRR
The number that matters most: New MRR + Expansion MRR - Churned MRR - Contraction MRR = Net New MRR. Positive net new MRR means you’re growing. Negative means you’re shrinking. Simple.
MRR Examples
Example 1: SaaS growth breakdown A project management tool has $200K MRR. This month: $25K new MRR, $15K expansion MRR, $12K churned MRR, $3K contraction MRR. Net new MRR: $25K. Ending MRR: $225K. The business is growing 12.5% month-over-month. A strong trajectory.
Example 2: Content service theStacc tracks MRR across its subscription tiers. Blog SEO ($99-$199/month), Local SEO ($49-$99/month), and Social ($49/month). Each new customer adds predictable MRR. Expansion happens when customers add modules (Blog + Local + Social). The organic content theStacc publishes for clients also compounds. Building an organic traffic asset that grows MRR through inbound leads.
Frequently Asked Questions
What’s the difference between MRR and ARR?
MRR is monthly. ARR (Annual Recurring Revenue) is MRR Ă— 12. SaaS companies under $10M typically track MRR; larger companies and investors often prefer ARR. They measure the same thing at different time scales.
Should one-time fees be included in MRR?
No. Setup fees, implementation charges, and one-time purchases should be excluded. MRR only counts revenue that repeats predictably each month. Including one-time revenue inflates MRR and creates misleading growth data.
What MRR growth rate is good?
15-20% month-over-month growth is exceptional for early-stage SaaS. 5-10% is strong for companies past $1M ARR. At scale ($10M+ ARR), 3-5% monthly growth is still healthy. The key is consistent net positive MRR growth. Not spiky months followed by flat ones.
Want to grow your MRR through organic inbound leads? theStacc publishes 30 SEO-optimized articles to your site every month. Automatically. Start for $1 →
Sources
How Monthly Recurring Revenue (MRR) shapes your marketing outcomes. In practice
Monthly Recurring Revenue (MRR) is a concept your competitors understand too. The difference between brands that benefit from it and those that don't comes down to consistent execution. The brands that stay visible aren't publishing more manually. They've automated their content pipeline. theStacc handles that side automatically, so your brand stays relevant without a full marketing team.
See how theStacc worksRelated Terms
Annual recurring revenue (ARR) is the annualized value of a company's recurring subscription revenue. Calculated as MRR multiplied by 12. Serving as the.
Average revenue per user (ARPU) is total revenue divided by the number of active users over a specific period. Measuring how much revenue each customer.
Churn rate is the percentage of customers who stop using your product or service during a given period. Learn the formula, benchmarks, and how to reduce churn.
Customer lifetime value (CLV or LTV) is the total revenue a business expects from a single customer. Learn the formula, how to calculate it, and how to.
Net revenue retention (NRR) is the percentage of recurring revenue retained from existing customers after accounting for expansions, contractions, and.
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