Monthly recurring revenue (MRR) is the predictable subscription revenue you expect to earn every month from active customers, normalized to a monthly amount. Add up what each active subscriber pays per month, converting annual, quarterly and weekly plans to a monthly figure. Leave out one-off fees, unpredictable usage, GST and free trials. MRR times 12 gives you annual recurring revenue (ARR).
Key takeaways
- MRR = the sum of every active subscriber's normalized monthly charge.
- Convert other billing periods: annual ÷ 12, quarterly ÷ 3, weekly × 52 ÷ 12.
- Leave out setup fees, one-off sales, variable usage spikes, GST and free trials.
- Net new MRR = new + expansion + reactivation − contraction − churn.
- Median growth for private B2B SaaS over $1M ARR was 24% a year in SaaS Capital's 2025 data.
Years ago, I was the government national sales manager for a telecommunications company. We had a usage-based pricing model.
One month, a government customer made a crazy number of conference calls during an election and spent a fortune with us. We celebrated.
The next month, their spending dropped off a cliff. We panicked.
That's the difference between revenue and recurring revenue. The election month was real money. But it was never coming back, and planning around it would have been a mistake.
Monthly recurring revenue exists to stop you making that mistake.
What is monthly recurring revenue (MRR)?
MRR is the predictable subscription revenue you can expect every month from your active customers.
It's not your bank balance. It's not your invoiced revenue. It's the amount that will turn up again next month if nothing changes: no new sign-ups, no cancellations, no upgrades.
In Chapter 7 of The Subscription Playbook, MRR is the first metric on my list for checking whether land and expand is working. If you're not getting recurring revenue, you're not getting the predictability that makes a subscription business worth building.
How is MRR calculated?
MRR = Sum of each active subscriber's monthly recurring charge
Or, if everyone pays roughly the same:
MRR = Number of paying subscribers × Average revenue per user (ARPU)
The trick is normalizing every plan to a monthly figure:
| Billing period | Convert to MRR |
|---|---|
| Monthly | As is |
| Annual (paid upfront or monthly) | Annual price ÷ 12 |
| Quarterly | Quarterly price ÷ 3 |
| Weekly | Weekly price × 52 ÷ 12 |
| Fortnightly | Fortnightly price × 26 ÷ 12 |
Watch the weekly one. Lots of gyms and services bill weekly, and many owners multiply by four. A year has 52 weeks, not 48, so that shortcut understates MRR by about 8 percent.
What to leave out of MRR
- One-off fees. Setup, joining, onboarding and hardware fees aren't recurring.
- Unpredictable usage. My election month. If usage is variable, include only a committed minimum (see hybrid pricing for how base-plus-usage plans work).
- GST and other taxes. In Australia, GST is collected on behalf of the ATO, not earned by you. Use prices excluding GST. The ATO's GST guidance explains who must register.
- Free trials. Zero until they pay.
- Customers who've cancelled, even if they have days left on their term.
A worked example: a gym's MRR (illustrative)
A suburban gym with three kinds of members
- 300 members on $22 a week: 300 × $22 × 52 ÷ 12 = $28,600
- 20 members on a $1,000 annual plan: 20 × $1,000 ÷ 12 = $1,667
- 40 members on a $15-a-month app-only plan: 40 × $15 = $600
- Joining fees collected this month: $1,200 (not MRR)
- Casual visit passes: $900 (not MRR)
MRR = $30,867
The owner's bank feed shows about $33,000 that month. The extra $2,100 is real, welcome money. It just isn't recurring.
Run your own plans through the MRR calculator. If you bill through Stripe, the Stripe Export Analyser will work it out from a CSV.
MRR CalculatorCalculate MRR, ARR and MRR movements.Open the free tool →How do you calculate net new MRR?
MRR on its own is a snapshot. The movements tell the story.
Net new MRR = New MRR + Expansion MRR + Reactivation MRR − Contraction MRR − Churned MRR
| Movement | What it is | Gym example this month |
|---|---|---|
| New MRR | First payments from new subscribers | +$2,860 (30 new weekly members) |
| Expansion MRR | Existing members paying more | +$400 (app members moving to full) |
| Reactivation MRR | Former members coming back | +$190 |
| Contraction MRR | Existing members paying less | −$300 (moving to off-peak) |
| Churned MRR | Members who cancelled | −$1,907 (20 weekly members) |
| Net new MRR | +$1,243 |
Each line has its own lever. Expansion revenue comes from giving members something to upgrade to. Churn is the subject of a whole chapter of the book, summarized in how to reduce churn.
Calculate your MRR, ARR and MRR movements
Enter your plans and movements. The free MRR Calculator gives you MRR, ARR and net new MRR in one place.
What's a good MRR growth rate?
There's no "good" MRR in dollars. A $5,000 MRR coffee club can be a better business than a $500,000 MRR software company that loses money. What you can benchmark is growth.
| Source and year | Segment | Growth |
|---|---|---|
| SaaS Capital, 2025 | Private B2B SaaS over $1M ARR, median annual growth | 24% |
| SaaS Capital, 2025 | Same group with NRR above 130% | 50% |
| KeyBanc and Sapphire Ventures, released Nov 2025 | Private SaaS, year-on-year ARR growth | 15% in 2024, expected 20% in 2025 |
For a local subscription business, the better benchmark is yourself. Is net new MRR positive most months? Is churned MRR shrinking as a share of the total?
Common MRR mistakes
- Counting an annual payment as one month's MRR. A $1,200 annual plan is $100 of MRR, not $1,200.
- Using list prices instead of what customers pay. Discounts are real.
- Including GST. It inflates MRR by 10 percent in Australia.
- Leaving failed payments in. A customer whose card has failed for weeks may already be gone. Decide when a past-due subscription counts as churned. See involuntary churn.
- Confusing MRR with cash. Annual plans paid upfront bring cash forward. Under Australian accounting standards (AASB 15) that cash is recognized as revenue over the term. Read revenue recognition for subscriptions.
Why MRR matters beyond the spreadsheet
Chapter 1 of the book starts with my first business. My agency lived project to project, feast or famine. I couldn't tell you what we'd earn next month.
MRR is the opposite of that. It's what lets you hire with confidence, borrow against your revenue and, one day, sell the business for a multiple of it. Buyers value recurring revenue far more than one-off sales, which is why the subscription vs one-off profit calculator is worth a look if you're still deciding whether to switch.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
What to do next
- List every plan you sell and convert each to a monthly figure.
- Calculate your MRR excluding GST, one-off fees and trials.
- Start a monthly log of the five MRR movements.
- Convert MRR to annual recurring revenue, and divide it by subscribers to get your ARPU.
Frequently asked questions
Is MRR the same as monthly revenue?
No. Monthly revenue in your accounts includes everything you invoiced or recognized that month: one-off sales, setup fees and usage. MRR only counts the recurring subscription part, normalized to a month. An annual plan paid upfront is one big cash receipt, a slice of recognized revenue each month and one-twelfth of its value in MRR. Three different numbers, all correct for their purpose.
Should discounts be included in MRR?
Use what the customer actually pays. If a customer is on a 20% discount, their MRR is the discounted price. If the discount is temporary, such as three months at half price, use the discounted amount while it applies and record the step-up as expansion when it ends. Never record list price for customers who aren't paying it.
Do free trial users count in MRR?
No. Someone on a free trial isn't paying yet, so their MRR is zero. Add them as new MRR on the day they convert to a paid plan. Counting trials inflates MRR and makes your churn look worse when trial users don't convert, because they look like cancellations of revenue you never had.
How do I calculate MRR from ARR?
Divide ARR by 12. If your ARR is $600,000, your MRR is $50,000. This only works if ARR was built from recurring subscriptions in the first place. If someone's ARR is really this month's total revenue times 12, including usage spikes or one-off sales, dividing it back gives you a run rate, not true MRR.
Can I get MRR straight from Stripe?
Stripe Billing reports MRR, and you can also export your subscriptions and analyze them yourself. Our free Stripe Export Analyser reads a Stripe subscriptions CSV in your browser and gives you MRR, churn and cohorts. Whichever you use, check how it treats annual plans, discounts, taxes and past-due subscriptions, because tools make different choices.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- SaaS Capital, 2025 B2B SaaS Retention Benchmarks, growth by NRR (Sept 2025)
- KeyBanc Capital Markets and Sapphire Ventures, Private SaaS Company Survey press release (13 Nov 2025)
- ATO, Registering for GST
- The Subscription Playbook, Chapters 1, 4 and 7 (Robert Coorey, 2022)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.