MRR

Category: Metrics & KPIs · Level: Entry · Also called: Monthly Recurring Revenue

TL;DR

Monthly Recurring Revenue — the normalized monthly value of all subscriptions in force, often used by month-to-month subscription businesses.

MRR is the monthly equivalent of ARR. Annual contracts are divided by 12 to compute their monthly contribution. MRR is favored by month-to-month SaaS businesses (consumer SaaS, freelancer tools, prosumer products) where the monthly cadence aligns with how customers actually buy and pay.

MRR decomposition into 'new MRR', 'expansion MRR', 'contraction MRR', and 'churn MRR' is the standard SaaS health diagnostic. Net new MRR each month is the leading indicator most operators track.

Formula

MRR = Σ (Monthly Subscription Value of all active customers)

  • Monthly Subscription Value — Each customer's contracted monthly recurring fee, normalized for annual contracts (annual ÷ 12)

Net new MRR = New + Expansion − Contraction − Churn. Track all four components, not just the headline.

Worked example

Starting MRR $400k; +$32k new + $14k expansion − $6k contraction − $11k churn = ending MRR $429k. Net new MRR = $29k; gross new MRR = $46k.

Common pitfalls

  • Mixing MRR and ARR reporting and confusing investors.
  • Ignoring contraction MRR (downgrades) by netting it into churn.
  • Reporting gross MRR growth instead of net new MRR.

When this shows up in a pitch deck

MRR appears on the Traction slide for early-stage SaaS; later-stage companies usually report ARR.

See MRR in context

MRR shows up most often in these scoring rubrics and investor profiles — jump straight to who cares about it and how to pitch them.

In VC frameworks

Related terms

  • ARR — Annual Recurring Revenue — the value of subscription contracts on a normalized 12-month basis, the headline SaaS revenue metric.
  • Net Revenue Retention — The percentage of recurring revenue retained from a cohort after one year, including expansion, contraction, and churn.
  • Logo Churn — The percentage of customers (logos) who cancel in a given period, regardless of how much revenue they represented.
  • Revenue Churn — The percentage of recurring revenue lost from existing customers in a period through cancellation or downgrade.
  • Land and Expand — A motion where a small initial deployment grows into a much larger account through additional seats, products, or use cases.

Use this in your next pitch deck

Deckmetric scores your pitch across 10 VC frameworks and against 8 investor types. Upload your deck for an instant analysis, or check the startup valuation calculator to benchmark your raise.