MRR (Monthly Recurring Revenue) is the total predictable revenue from all active subscriptions in a given month, normalized to a monthly amount.

How do you calculate MRR from annual subscriptions?

Divide the annual subscription amount by 12. A $1,200/year plan contributes $100/month to MRR.

Does MRR include one-time charges?

No. MRR only includes recurring subscription revenue. One-time charges, setup fees, and usage overages are excluded.

What is a good MRR growth rate?

Early-stage SaaS companies typically target 10-20% monthly MRR growth. At scale ($1M+ ARR), 5-10% monthly growth is considered strong.

Net New MRR = New MRR + Expansion MRR - Churned MRR - Contraction MRR. It shows whether your recurring revenue is growing or shrinking.

What Is MRR (Monthly Recurring Revenue)? Definition, Formula & Types

Definition

Monthly Recurring Revenue (MRR) is the sum of all active subscription amounts normalized to a monthly value. MRR is the single most important metric for subscription businesses because it represents predictable, repeatable income.

MRR Formula

The standard MRR formula is:

MRR = Sum of (Monthly Price × Quantity) for all active subscriptions

For example, if you have 50 customers paying $100/month and 10 customers paying $200/month, your MRR is 50 × $100 + 10 × $200 = $7,000.

Five Types of MRR

MRR is broken into five components that explain where revenue changes come from each month:

Type	Definition
New MRR	Revenue from first-time customers who subscribed during the period.
Expansion MRR	Additional revenue from existing customers who upgraded or purchased add-ons. See Expansion MRR.
Contraction MRR	Revenue lost from existing customers who downgraded their plan.
Churned MRR	Revenue lost from customers who canceled entirely. See Churn Rate.
Reactivation MRR	Revenue from previously churned customers who resubscribed.

Net New MRR ties these together: Net New MRR = New MRR + Expansion MRR + Reactivation MRR - Contraction MRR - Churned MRR

How to Calculate MRR from Stripe

Stripe stores subscription data with status, price, quantity, and billing interval fields. To calculate MRR from Stripe:

Include only active subscriptions. Filter for subscriptions where status = active or status = trialing (if you count trials).
Normalize annual plans. Divide annual subscription amounts by 12. A $1,200/year plan contributes $100/month to MRR.
Exclude one-time charges. Invoice line items with type = invoiceitem (not tied to a subscription) are excluded.
Handle quantity-based pricing. Multiply the unit price by the subscription quantity: unit_amount × quantity.

MRR vs Revenue

MRR is not the same as total revenue. MRR excludes one-time charges, setup fees, consulting revenue, and refunds. It only counts the recurring subscription component.

Included in MRR	Excluded from MRR
Monthly subscription fees	One-time setup fees
Annual plans (divided by 12)	Consulting or services revenue
Recurring add-ons	Refunds and credits
Quantity-based recurring charges	Usage overages (unless recurring)

Good MRR Growth Benchmarks

MRR growth rate varies by company stage. The table below shows typical benchmarks:

Stage	Monthly MRR Growth	Context
Pre-revenue to $10K MRR	15-30%	High variance; finding product-market fit
$10K-$100K MRR	10-20%	Early traction; repeatable acquisition channels emerging
$100K-$500K MRR	5-15%	Scaling phase; efficiency matters more
$500K+ MRR	2-5%	At scale; compounding growth on a larger base

To convert monthly growth to annual recurring revenue (ARR) growth, use: Annual Growth = (1 + Monthly Growth Rate)^12 - 1. A 10% monthly growth rate compounds to roughly 214% annual growth.

What Is MRR (Monthly Recurring Revenue)?