Monthly recurring revenue (MRR)
Monthly recurring revenue (MRR) is the normalized, predictable subscription revenue a business expects each month. Annual and multi-month plans are divided down to a monthly figure so the run rate is comparable. MRR is decomposed into new, expansion, contraction, and churned components, and it deliberately excludes one-off and usage-based charges — so it is a run-rate concept, not booked or recognized revenue.
What this means
MRR is the sum of each active subscription's monthly-normalized value. An annual plan billed once is counted as one-twelfth per month; a quarterly plan as one-third. The result is a smooth monthly run rate that is comparable period to period even when customers pay on different cadences. MRR is a SaaS planning metric, not a GAAP figure, and differs from recognized revenue.
The MRR movement breakdown
Net change in MRR is conventionally split into components: new MRR (from new customers), expansion MRR (upgrades, seat additions, cross-sells), contraction MRR (downgrades), and churned MRR (cancellations). Net new MRR = new + expansion − contraction − churn. This decomposition is the point of the metric: a stable total can mask strong acquisition offset by heavy churn, and only the components show it. MRR usually excludes one-time fees and pure usage charges, which are not recurring.
- Multi-month plans normalized to a monthly value
- New + expansion − contraction − churn = net new MRR
- Excludes one-off and usage-only charges
How it appears in analytics and logs
An MRR figure summarizes recurring monthly revenue at a point in time. A flat headline MRR can hide large offsetting movements — new and expansion gains cancelling contraction and churn — which the component breakdown reveals.
Diagnostic use case
Use MRR as a normalized monthly run-rate for subscription revenue, and track its new/expansion/contraction/churn components to see what is driving change.
What WebmasterID can help detect
WebmasterID measures the on-site behavior of subscribers via first-party events, so signup, upgrade, and cancellation actions feeding an MRR model are captured without third-party cookies.
Common mistakes
- Treating MRR as recognized or booked revenue.
- Reading net MRR without the new/expansion/churn breakdown.
- Including one-time fees in recurring revenue.
Privacy and accuracy notes
MRR is an aggregate revenue concept; it needs no personal identifiers. It is an educational definition, not accounting or legal advice.
Related pages
- Annual recurring revenue (ARR)
Annual recurring revenue (ARR) is the annualized value of a business's recurring subscription revenue — the run rate it would earn over a year if nothing changed. It is closely tied to MRR (often MRR × 12) and is used for longer-horizon planning and contracts. ARR is a forward run-rate snapshot, not historical annual revenue, and like MRR it excludes one-off and usage charges.
- Average revenue per user (ARPU)
Average revenue per user (ARPU) is total revenue in a period divided by the number of users in that period. It is a standard unit-economics metric for subscription and consumer products, summarizing how much revenue each user generates. ARPU depends heavily on which users are in the denominator (all users vs active vs paying) and the length of the period, and it differs from ARPPU and lifetime value.
- Average revenue per paying user (ARPPU)
Average revenue per paying user (ARPPU) is total revenue divided by the number of paying users — it excludes everyone who did not spend. By isolating the paying base, ARPPU separates how much paying customers spend from how many people convert to paying. It is always at least as large as ARPU, and reading the two together reveals whether revenue is driven by spend depth or by the share who pay.
- Website observability
Capture subscriber actions with first-party events.
Sources and verification notes
- Stripe Docs — Monthly recurring revenue (MRR) in Billing analyticsDefines MRR and its movement components in a billing context.
Last reviewed 2026-06-24. Facts are checked against primary/official sources where available; uncertain specifics are marked “Data not yet verified” rather than guessed.