Transparent method
The formula
Worked example
Example inputs
How to interpret the result
MRR is meant to capture only genuinely recurring subscription revenue, and folding in one-time implementation fees, professional services or usage-based overages inflates the figure without the underlying recurring business actually having grown. The distinction matters because investors and internal planning both treat MRR as a predictor of next month's baseline revenue, which nonrecurring income isn't.
Before you rely on it
What to check
Confirm every dollar counted in MRR is genuinely recurring and expected to repeat next month, separate from any one-time fees or variable usage charges billed alongside it.
The common error
Where people go wrong with MRR & ARR calculator
Including one-time setup fees or variable usage charges in the MRR figure. That inflates a number meant specifically to represent predictable, repeating revenue with income that isn't actually predictable in the same way.
Sensitivity evidence
How customers changes the ending MRR
| Customers | Ending MRR | Annual recurring revenue |
|---|---|---|
| 200 | $45,000 | $540,000 |
| 225 | $50,000 | $600,000 |
| 250worked example | $55,000 | $660,000 |
| 275 | $60,000 | $720,000 |
| 300 | $65,000 | $780,000 |
Every input, tested
Which input moves the ending MRR most
| Input | Tested from | To | Ending MRR at each end | Swing |
|---|---|---|---|---|
| Customers | 225 | 275 | $50,000 to $60,000 | $10,000 (18%) |
| Average monthly revenue per customer | $180 | $220 | $50,000 to $60,000 | $10,000 (18%) |
| New monthly recurring revenue | $7,200 | $8,800 | $54,200 to $55,800 | $1,600 (2.9%) |
| Churned monthly recurring revenue | $2,700 | $3,300 | $55,300 to $54,700 | $600 (1.1%) |
Two variables at once
Ending MRR by customers and average monthly revenue per customer
| Customers \ Average monthly revenue per customer | $160 | $200 | $240 |
|---|---|---|---|
| 200 | $37,000 | $45,000 | $53,000 |
| 225 | $41,000 | $50,000 | $59,000 |
| 250 | $45,000 | $55,000 | $65,000 |
| 275 | $49,000 | $60,000 | $71,000 |
| 300 | $53,000 | $65,000 | $77,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Customers | 250 |
| Average monthly revenue per customer | $200 |
| New monthly recurring revenue | $8,000 |
| Churned monthly recurring revenue | $3,000 |
| Ending MRR | $55,000 |
| Annual recurring revenue | $660,000 |
Where the inputs come from
Customers and average monthly revenue per customer give the recurring revenue base, and new and churned monthly recurring revenue are the changes during the period. Include only recurring subscription revenue, not one-time setup fees or services. Take the figures from your billing system, normalizing annual contracts to a monthly amount by dividing by twelve, and exclude usage that is not committed. Use the same definitions each month.
Using the ending MRR in a real decision
Investors and buyers value SaaS companies on ARR multiples, so consistency of definition matters.
When the result stops applying
Recurring revenue definitions vary, and counting one-time revenue, discounts or unpaid invoices inflates it. ARR is a snapshot, not booked revenue under accounting rules. Annual prepaid contracts and usage-based pricing complicate the calculation. A fast-growing MRR can hide high churn.
What to compare it with
See the growth breakdown on the MRR growth calculator, retention on the net and gross revenue retention pages, and churn on the SaaS churn calculator. The LTV:CAC and CAC payback calculators show the economics behind the growth. The rule of 40 page balances growth and profit.
People also ask
Frequently asked questions
What is the difference between MRR and ARR?
MRR is monthly recurring revenue, and ARR is the same figure annualized, MRR times twelve. Companies with annual contracts often talk in ARR.
What counts as recurring revenue?
Subscription fees that repeat on a schedule. One-time fees, setup charges and non-recurring services are excluded.
How is ARR different from revenue?
ARR is an annualized run-rate of current subscriptions. Recognized revenue under accounting rules depends on what was delivered in the period.