What Is MRR? How to Calculate Monthly Recurring Revenue
MRR (Monthly Recurring Revenue) is the most important SaaS metric. Learn exactly how to calculate it, track it over time, and use it to grow your startup.
Monthly Recurring Revenue (MRR) is the heartbeat of every SaaS business. It tells you exactly how much predictable revenue your business generates each month from active subscriptions.
How to Calculate MRR
The basic formula is straightforward:
MRR = Number of active subscribers × Average revenue per user (ARPU)
For example, if you have 100 customers paying an average of $50/month, your MRR is $5,000.
Types of MRR
To really understand your growth, break MRR into components:
- New MRR: Revenue from brand-new customers
- Expansion MRR: Additional revenue from existing customers (upgrades, add-ons)
- Contraction MRR: Lost revenue from downgrades
- Churned MRR: Revenue lost from cancellations
- Net New MRR: New + Expansion − Contraction − Churned
Why MRR Matters
MRR is the foundation for almost every other SaaS metric — ARR, growth rate, LTV, and runway calculations all depend on it. Investors look at MRR first when evaluating SaaS companies.
The key insight is that Net New MRR tells you whether your business is actually growing. Even if you're adding customers, high churn can make your Net New MRR negative.
How to Track MRR Automatically
Stop calculating MRR in spreadsheets. Space Worm Analytics connects to your Stripe account and calculates all MRR components automatically — including new, expansion, contraction, and churned MRR — updated daily.