Monthly Recurring Revenue (MRR)

What is MRR?

Monthly Recurring Revenue (MRR) is the total predictable revenue your SaaS business earns from subscriptions each month. It normalizes every subscription to a monthly equivalent and applies active discounts, giving you one number that represents your recurring revenue run rate.

A $120/year plan counts as $10/month. A $50/quarter counts as $16.67/month. Active coupons and discounts reduce the amount, because discounted revenue is real revenue loss. MRR is the foundation — ARR, retention rates, churn, lifetime value, and health scores all depend on it.

The MRR formula

Multi-item subscriptions (a base plan + add-on on the same subscription) are summed per line item, each normalized by its own billing interval. Percentage and fixed-amount coupons are applied before any aggregation.

Worked example

Two active subscriptions on March 15:

That $39.50 is your monthly revenue run rate from both subscriptions combined — annualized, it means $474 in ARR.

This value has been cross-validated against four independent sources — North Metric, Stripe’s own MRR calculation, and two leading SaaS analytics platforms. All four agree to the cent.

How it’s computed

MRR changes are classified into five mutually exclusive categories by comparing subscription state at the start and end of each period:

Joined-and-churned — the convention that prevents inflated metrics

A subscription created and canceled within the same month appears in both New Business and Churn, netting to zero. Both North Metric and ChartMogul follow this convention. Without it, churn rates can be inflated by 20-40 percentage points in periods with high trial-to-cancel activity.

Discounts are subtracted

A $100/month subscription with a 20% coupon contributes $80 to MRR, not $100. If you’re comparing North Metric to a tool where discounts are excluded, your MRR will look lower here — and more accurate.

MRR vs Revenue — why you might see two numbers

MRR (from invoice-line data, net of discounts) and plan-list-price Revenue (the simpler sum of what plans cost before coupons) usually differ by 1-5% on a healthy account. A larger gap means heavy coupon use or significant proration.

Common MRR mistakes

1. Not normalizing billing intervals. An annual plan paying $1,200/year should contribute $100/month to MRR, not $1,200 in the month it’s charged.
2. Ignoring discounts. A $100 subscription with a 50% coupon is $50 of MRR. Counting the list price inflates your numbers.
3. Counting one-time charges. Setup fees, implementation charges, and one-time add-ons are revenue, not MRR. Only recurring subscription amounts qualify.
4. Using end-of-period MRR as the denominator for retention metrics. Always use starting MRR — using end-of-period double-counts expansion.

SaaS MRR growth benchmarks

MRR growth benchmarks are segmented by stage. Where you stand relative to peers at your revenue level matters more than raw numbers.

Frequently asked questions

How do you calculate MRR from annual subscriptions?

Divide the annual amount by 12. A $1,200/year plan contributes $100/month to MRR, not $1,200 in the month the invoice is paid. The same normalization applies to quarterly (÷ 3), semi-annual (÷ 6), and weekly (× 52 ÷ 12) billing intervals, giving you one comparable monthly figure across every subscription.

Should MRR include discounts?

Yes. MRR should reflect what you actually collect, not the list price. A $100 plan with a 20% coupon is $80 of MRR. Excluding discounts inflates your numbers and misrepresents your revenue run rate. If the coupon expires, the MRR increase shows up automatically as expansion in the next period.

What’s the difference between MRR and ARR?

ARR = MRR × 12. They measure the same recurring revenue at different scales. Use MRR for monthly operational decisions — tracking churn, expansion, and retention trends. Use ARR for annual planning, fundraising, and investor communication where annualized figures are the standard unit.

What is a good MRR growth rate for a SaaS startup?

Early-stage SaaS companies targeting venture scale typically aim for 15-20% month-over-month MRR growth. At $50K+ MRR, 10-15% is strong. Above $200K MRR, 5-8% month-over-month is competitive. Growth rate depends heavily on your stage, market, and business model — compare against peers at your revenue tier, not industry-wide averages.

Does North Metric include one-time charges in MRR?

No. Only recurring subscription amounts qualify as MRR. Setup fees, implementation charges, and one-time add-ons are tracked separately as revenue events but excluded from MRR. Including them would spike your monthly figure and misrepresent the predictable revenue your business actually earns on a recurring basis.