Subscriptions

MRR calculator (monthly recurring revenue)

MRR is the recurring revenue you bill each month: customers × monthly price for every plan, plus annual plans divided by 12, minus recurring discounts. Two monthly plans and one annual plan here add up to $7,848 of MRR, or $94,176 ARR.

Marketing Calculators editorial teamUpdated 3 sources

Calculator 16

Monthly recurring revenue

Try

Monthly plans

Annual plans

Adjustments

Monthly recurring revenue

$7,848

152 paying customers bring in $7,848 of MRR, or $94,176 annual run rate.

LineMRRHow
Plan A$2,900100 × $29.00
Plan B$3,96040 × $99.00
Annual plans (÷ 12)$1,18812 × $1,188 ÷ 12
Recurring discounts−$200
ARR (MRR × 12)$94,176
Average revenue per account$51.63MRR ÷ paying customers

Formula. MRR = Σ (customers × monthly price) + Σ (annual price ÷ 12) − recurring discounts. ARR = MRR × 12. ARPA = MRR ÷ paying customers.

How to calculate MRR

To calculate MRR, add up the normalised monthly value of every active subscription. Monthly plans count at their monthly price; annual and multi-year plans count at their price divided by the number of months they cover. One-time fees, setup charges and usage overages that do not recur are left out.

MRR=Σ customers × monthly priceannual contracts ÷ 12; minus recurring discounts
Worked example
LineCustomersMonthly priceMRR
Starter (monthly)100$29.00$2,900
Pro (monthly)40$99.00$3,960
Pro (annual, $1,188)12$99.00$1,188
Recurring discounts−$200
MRR152$7,848
  • MRR$7,848
  • ARR$94,176
  • ARPA$51.63

MRR and ARR

ARR is annualised recurring revenue: MRR × 12, or the annual value of subscription contracts. Public companies define it in their filings; Amplitude, for example, defines ARR as the annual recurring revenue of subscription agreements.[1] Because the definition belongs to each company, state yours. The ARR formula page builds an ARR bridge from new, expansion, contraction and churn.

MRR movements

MRR changes for four reasons: new customers, expansion (upgrades), contraction (downgrades) and churn. Ending MRR = starting MRR + new + expansion − contraction − churn. Tracking them separately shows whether growth comes from new sales or from existing customers; revenue retention metrics such as net dollar retention come from the expansion, contraction and churn lines.[2] Keep the churn line low by looking after existing customers,[3] and measure it with the churn rate calculator.

MRR mistakes

  1. Booking annual payments as one month’s MRR. A $1,188 annual payment is $99 of MRR, not $1,188.
  2. Counting trials and one-off fees. Free trials have no recurring revenue yet; setup fees do not recur.
  3. Ignoring discounts. A 20% lifetime discount reduces MRR every month; a one-month promotion only that month.

With ARPA in hand, the customer lifetime value calculator turns MRR per customer and churn into lifetime value, and the CAC calculator tells you how many months of it a new customer costs.

Frequently asked questions

How do you calculate monthly recurring revenue?

Customers × monthly price for each plan, plus annual plans ÷ 12, minus recurring discounts.

How do I convert MRR to ARR?

Multiply by 12. $7,848 MRR × 12 = $94,176 ARR.

Is MRR the same as monthly revenue?

No. Monthly revenue includes one-time charges and usage; MRR counts only the recurring, normalised subscription value.

What is ARPA?

Average revenue per account: MRR ÷ paying customers.

Sources

  1. Amplitude, Inc. Form 10-K for 2022 (definition of ARR) · U.S. Securities and Exchange Commission (EDGAR), filed February 2023
  2. CrowdStrike Holdings Form 10-K for fiscal 2020 (dollar-based net retention rate) · U.S. Securities and Exchange Commission (EDGAR), filed March 2020
  3. Principles of Marketing, 1.6 Customer Relationship Management (CRM) · OpenStax, Rice University, 2023