What is MRR? How to calculate monthly recurring revenue

MRR (monthly recurring revenue) is the amount your active, paying subscriptions bring in per month, with every plan converted to a monthly amount. A customer on a $20 monthly plan adds $20 to MRR; a customer on a $240 yearly plan also adds $20, because $240 ÷ 12 = $20. Trials, one-off payments and cancelled subscriptions don't count.

MRR is the headline number for subscription businesses, and the first figure a buyer asks for when a SaaS or app is for sale. It is also the number most often calculated differently by the seller and the buyer, so it is worth getting exactly right.

What is the MRR formula?

MRR = the sum, over every active paying subscription, of its price per billing period ÷ the number of months in that period, after recurring discounts.

For a simple business with one monthly price:

MRR = number of paying customers × monthly price

So 120 customers on a $15 monthly plan is $1,800 MRR. Once you have several plans, intervals or discounts, add each subscription up individually.

How do you convert annual, quarterly and weekly plans to MRR?

Divide the price by the number of months the billing period covers:

Billing interval	Monthly amount	Example
Monthly	price	$29/month → $29
Quarterly	price ÷ 3	$75/quarter → $25
Yearly	price ÷ 12	$300/year → $25
Weekly	price × 52 ÷ 12	$5/week → $21.67
Every 2 months	price ÷ 2	$50 → $25

Count the annual plan's monthly share every month, not the full amount in the month it was paid. Counting a $300 yearly payment as $300 of MRR in March is one of the most common ways MRR gets overstated.

What counts as MRR and what doesn't?

Only revenue that will repeat without the customer doing anything counts.

Counts:

• Active subscriptions, on any interval, normalised to monthly.
• Subscriptions whose latest payment failed but haven't been cancelled yet (Stripe calls them "past due"). The customer still intends to pay; if they never do, the subscription is cancelled and drops out.
• Recurring discounts that are in effect: a customer paying $20 with a 25% coupon "forever" adds $15, not $20.
• Seat-based or quantity pricing: 4 seats at $10 is $40.

Doesn't count:

• Free trials. No money has changed hands yet.
• One-off payments: setup fees, lifetime deals, consulting, one-time purchases.
• Cancelled or unpaid subscriptions, even if the customer paid last month.
• Refunds and chargebacks reduce revenue, and a refunded subscription that was cancelled is no longer MRR.
• Taxes (VAT, sales tax) collected on behalf of the government.

One-time discounts are a judgment call. A 50% discount on the first month only doesn't change the customer's ongoing MRR, so most calculations leave it out.

A worked MRR example

A small SaaS has these subscriptions at the end of the month:

Customers	Plan	Monthly value each	Total
40	$19/month	$19.00	$760.00
12	$190/year	$15.83	$190.00
5	$49/month with 20% recurring discount	$39.20	$196.00
8	Free trial of the $19 plan	$0	$0
3	$19/month, payment failed, not cancelled	$19.00	$57.00
—	Two $500 setup fees paid this month	not MRR	$0

MRR = $760 + $190 + $196 + $57 = $1,203.

Cash collected this month might be much higher (the annual plans that renewed, the setup fees), but none of that changes the business's recurring revenue.

What is the difference between MRR and ARR?

ARR (annual recurring revenue) is MRR × 12. It describes the same recurring revenue on a yearly scale. Small SaaS and app businesses usually talk in MRR; larger B2B companies and investors usually talk in ARR. A business with $1,203 MRR has $14,436 ARR.

ARR is not the same as last year's revenue. It is a snapshot of today's subscriptions, annualised.

What is the difference between MRR and revenue?

MRR is a run rate; revenue is money actually received. Revenue for a month includes one-off payments and the full value of annual plans paid that month, minus refunds. MRR smooths those out. A business can have a revenue spike in January (annual renewals) while MRR stays flat.

Buyers look at both. MRR tells them what the business earns going forward; revenue over the last 12 months, matched to bank deposits, tells them the MRR figure is real.

What are new, expansion and churned MRR?

MRR changes month to month for four reasons, and breaking it down shows where growth comes from:

• New MRR: from customers who started paying this month.
• Expansion MRR: existing customers upgrading or adding seats.
• Contraction MRR: existing customers downgrading.
• Churned MRR: customers who cancelled or stopped paying.

Net new MRR = new + expansion − contraction − churned. If you added $400 from new customers and $50 from upgrades, but lost $120 to cancellations and $30 to downgrades, net new MRR is $300.

Why does Stripe show a different MRR than my own calculation?

Different tools apply different rules: whether past-due subscriptions count, how discounts and metered usage are handled, which currency rates are used and when a cancellation takes effect. None of them is wrong, but you should know which rules produced the number you quote.

On VerifyArr, MRR is calculated from a Stripe account's subscriptions using the rules on this page: active and past-due subscriptions count, trials and one-off payments don't, every interval is normalised to a month, and recurring discounts reduce the total. For apps connected through RevenueCat, it uses the MRR RevenueCat calculates from App Store and Google Play receipts. Figures are stored in the account's currency and shown in US dollars, converted at daily reference rates.

Frequently asked questions

Is MRR the same as monthly revenue?

No. Monthly revenue includes one-off payments and annual plans in the month they were paid. MRR only includes recurring subscriptions, converted to a monthly amount.

Do free trials count towards MRR?

No. A trial adds to MRR only once it converts to a paid subscription.

Do lifetime deals count as MRR?

No. A lifetime deal is a one-off payment, however large. It is revenue, not recurring revenue.

How do I calculate MRR in Stripe?

Stripe's Billing dashboard shows an MRR figure, or you can add it up yourself from active subscriptions using the formula above. If you are selling, connect a read-only key to a verification service so buyers see a figure you didn't calculate yourself.

What is a good MRR?

There is no single benchmark; it depends on your costs and goals. For a business you plan to sell, steady month-over-month growth and low churn matter more to buyers than the absolute number. The valuation estimate on the sell page shows how MRR, growth and churn translate into a price range.

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If you want a verified MRR figure to show buyers, investors or your build-in-public audience, connect Stripe or RevenueCat to VerifyArr. It is free, read-only and updates every hour.