Monthly Recurring Revenue (MRR) is the total predictable revenue a business expects to receive on a monthly basis from active, recurring subscriptions. It is the core financial metric for SaaS and subscription-based businesses, providing a clear snapshot of monthly income and growth over time.
What Is Monthly Recurring Revenue?
MRR represents normalized monthly revenue from subscription-based services. It excludes one-time payments, setup fees, and irregular charges, focusing solely on reliable monthly revenue from active paying customers.
💡 MRR is a foundational component of forecasting, reporting, growth analysis, and investor conversations for any SaaS company.
MRR Formula
MRR = Total Number of Active Customers × Average Revenue Per Customer (per month)
Example:
200 customers paying $50/month →
MRR = 200 × $50 = $10,000
You can also calculate MRR by plan:
textCopyEditMRR = (Basic Plan Customers × Basic Price) + (Pro Customers × Pro Price) + ...
Types of MRR
| MRR Type | Description |
|---|---|
| New MRR | Revenue from newly acquired customers |
| Expansion MRR | Revenue from existing customers upgrading or adding services |
| Contraction MRR | Revenue lost from downgrades |
| Churned MRR | Revenue lost from cancellations |
| Net New MRR | (New + Expansion) – (Contraction + Churn) |
| Total MRR | Sum of all active recurring revenue for the month |
Why MRR Matters in B2B SaaS
- 📈 Tracks Growth Trajectory – A leading indicator of ARR and overall revenue
- 💰 Supports Budgeting & Forecasting – Enables cash flow planning
- 🧠 Guides Acquisition Strategy – Tells which pricing tiers and personas are profitable
- 📊 Monitors Churn & Health – Fluctuations highlight retention issues
- 💸 Appeals to Investors – A key valuation metric in SaaS fundraising
MRR Benchmarks by Company Stage
| Stage | Healthy MRR Growth Rate |
|---|---|
| Pre-Seed / Seed | 10–25% MoM |
| Series A–B | 8–15% MoM |
| Growth Stage | 5–10% MoM |
| Mature Enterprise | 3–6% MoM |
MRR vs ARR (Annual Recurring Revenue)
| Metric | Timeframe | Formula |
|---|---|---|
| MRR | Monthly | MRR = #Customers × Monthly Fee |
| ARR | Annual | ARR = MRR × 12 |
ARR is a scaled-up version of MRR. Both are essential, but MRR provides faster insight into short-term trends and adjustments.
Common MRR Pitfalls
- ❌ Including one-time charges or setup fees
- ❌ Counting trial users as revenue
- ❌ Failing to account for churn or contraction
- ❌ Ignoring plan downgrades in MRR reporting
How to Grow MRR Effectively
- 🚀 Acquire more customers with optimized ICP and targeting
- 💡 Increase ARPA by upselling to higher-tier plans
- 📈 Reduce churn through onboarding, education, and support
- 🧠 Launch add-ons or premium features
- 📊 Use pricing experiments to optimize revenue per customer
- 🎯 Retarget inactive or freemium users with upgrade campaigns
MRR & CUFinder
CUFinder helps companies grow MRR by supplying high-fit, verified B2B leads. With advanced firmographic filters, accurate contact data, and segmentation capabilities, CUFinder boosts your sales pipeline quality — translating directly into more consistent, scalable MRR growth.
Cited Sources
- Wikipedia: Software as a service
- Wikipedia: Revenue
- Wikipedia: Customer relationship management
- Wikipedia: Recurring revenue