Definition
MRR adds up every active subscription’s recurring price, converted to a monthly amount. An annual plan at $12,000 contributes $1,000. Discounts reduce MRR; one-time fees do not count.
Formula
MRRMRR = Σ (each active subscription’s recurring charge, normalized to one month)
Example
Demo Co started October at $246.1K of MRR and ended at $255.1K after new business, expansion, contraction and churn.
Benchmarks
There is no universal target. What matters is the trend and what drives it, which is why MRR is usually reported with an MRR bridge.
Common mistakes
- Counting annual prepayments in the month they are paid.
- Forgetting to normalize quarterly and annual plans.
- Leaving past-due subscriptions in MRR indefinitely.
Examples use Demo Co, a fictional $3M ARR SaaS company, or a generic company where noted. Benchmarks are common reference points, not targets for every business.