MRR Calculator

The arithmetic

Monthly recurring revenue is the normalised monthly value of all active subscriptions: Σ(subscribers on a plan × that plan's monthly price).

Annual plans are divided by twelve rather than counted in the month they were paid, which is the whole point of the metric; it describes the run rate rather than the cash received.

One-off charges, setup fees and usage overages sit outside it, because they are not recurring and including them destroys the metric's meaning.

Numbers on it

2,000 subscribers at $29 a month is $58,000 of MRR and $696,000 of ARR.

Now 1,600 monthly subscribers at $29 and 400 annual at $290 paid up front: MRR is $46,400 + (400 × $290 ÷ 12) = $46,400 + $9,667 = $56,067.

Cash received in a month with 30 annual renewals would be $46,400 + $8,700 = $55,100, which is a different number again.

MRR, ARR and cash are three distinct figures and a business that conflates them will forecast badly, because annual plans front-load cash and level revenue.

What it does not tell you

Including one-off revenue in MRR inflates it and makes the trend meaningless, since a good month of setup fees looks like recurring growth that will not repeat.

Discounts also need care: a subscriber on a 50% first-year discount contributes half the MRR of a full-price one, and counting them at list price overstates the base by whatever the discounting is.

What follows from it

Count only genuinely recurring revenue at the price actually being paid, and report one-off revenue separately. The discipline costs nothing and it is what makes MRR forecastable.

Then break the movement into its components: new, expansion, contraction, churn, rather than reporting the net figure alone, since the same net change can come from very different underlying situations.

Why the components matter more than the total

MRR growing $4,000 in a month could be $4,000 of new business with no churn, or $12,000 of new business against $8,000 of churn. The first is a healthy business and the second is a leaking one growing anyway.

The four-component view: new, expansion, contraction, churned, makes the difference visible immediately and is the standard reporting format for exactly that reason.

It also identifies which lever to pull. A business losing $8,000 a month to churn cannot fix it by acquiring harder, and one with no expansion revenue has a pricing or packaging opportunity it has not taken. The net number points at neither.

Committed MRR is the variant worth tracking alongside it, counting contracted revenue that has not yet started billing. For a business with onboarding periods or delayed starts it is a leading indicator that plain MRR misses entirely.

Reporting both makes a quarter with heavy signings but slow activation legible, where the MRR line alone would suggest the sales effort had failed.

Currency also needs a stated convention for businesses billing in several, since MRR translated at spot rates moves with the exchange rate rather than with the business.

Fixing the rate for a reporting period, and disclosing it, keeps the trend readable.

Reporting MRR net of discounts rather than at list price is the convention worth adopting, since discounted subscribers contribute what they pay and a business tracking list value will consistently overstate its base.

Reconciling MRR to billed revenue each month catches configuration errors early, since the two should differ only by known timing effects and any other gap indicates something is being counted wrongly.