Definition
Monthly Recurring Revenue (MRR) is the predictable, repeatable revenue a business expects to generate every month from active subscriptions or ongoing contracts. It is a core metric for subscription-based and SaaS businesses, helping track financial health, forecast growth, and measure the impact of GTM initiatives over time.
MRR focuses on recurring components only, meaning one-time setup fees, usage-based overages, or service charges are excluded. This ensures a consistent view of your baseline revenue.
MRR breakdown: Not all dollars are equal
Why MRR matters
- Revenue predictability: It’s easier to plan hiring, infrastructure, and marketing budgets when you know how much you’ll earn next month.
- Investor confidence: MRR is often the first number potential investors want to see as it signals traction, efficiency, and retention potential.
- Sales & CS alignment: MRR helps connect the dots between acquisition (new MRR) and retention (net MRR), bringing Sales and Customer Success to the same table.
Sample metrics based on MRR
- MRR growth rate = (Current MRR – Last month MRR) / Last month MRR
- Net revenue retention (NRR) = (Starting MRR + Expansion – Churn – Contraction) / Starting MRR
MRR ≠ ARR (Annual Recurring Revenue)
- MRR is monthly.
- ARR is annualised (MRR × 12), but not always just a multiple, especially in usage-based models or hybrid pricing.
Final thought
MRR is a lens into customer loyalty, sales effectiveness, and product-market fit. Tracking it in isolation is a start. Interrogating its components is where the real insight lies.
GPT prompt for MRR insights
Act as a RevOps leader. Analyse the last 6 months of MRR data to identify trends in churn, expansion, and net growth. Highlight any segments where expansion MRR is outpacing new MRR, and recommend playbook changes
