What Is MRR (Monthly Recurring Revenue)?
The single most important metric for any subscription business — and how to track it correctly.
Definition
Monthly Recurring Revenue (MRR) is the predictable revenue your business earns each month from active subscriptions. It normalizes all your subscription plans — monthly, quarterly, annual — into a single monthly figure.
MRR excludes one-time charges, setup fees, and non-recurring add-ons. It only counts revenue that you can reasonably expect to receive again next month.
How MRR Is Calculated
The simplest formula is: MRR = Number of active subscribers × Average revenue per subscriber.
For more granularity, calculate MRR by summing the monthly-normalized value of every active subscription. An annual plan paying $1,200/year contributes $100/month to MRR.
Varsal automatically computes your MRR from connected payment providers like Stripe and RevenueCat, normalizing all plan intervals into monthly values.
Track this metric live in your dashboard →Why MRR Matters
MRR is the heartbeat of a subscription business. Unlike total revenue, which fluctuates with one-time sales and seasonal spikes, MRR shows your true recurring baseline.
Investors use MRR to gauge momentum. A company growing MRR 15% month-over-month is compounding at nearly 5x annually — that signal is impossible to see in raw revenue numbers.
MRR Benchmarks
Pre-seed startups typically reach $1K–$10K MRR before raising. Seed-stage companies aim for $10K–$50K. Series A usually requires $100K+ MRR with consistent growth.
Healthy MRR growth rates range from 10–20% month-over-month for early-stage startups and 5–10% for growth-stage companies. Anything above 20% month-over-month is exceptional.
How to Improve MRR
There are four levers for MRR growth: new customer acquisition, expansion revenue (upsells), reactivation of churned customers, and reducing churn.
Expansion revenue is the most capital-efficient lever. If your existing customers upgrade plans or add seats, your MRR grows without spending on acquisition. Many best-in-class SaaS companies have net revenue retention above 120%, meaning MRR grows even with zero new customers.
MRR Components
Break MRR into its components to understand what drives changes: New MRR (from new customers), Expansion MRR (upgrades and add-ons), Contraction MRR (downgrades), and Churned MRR (cancellations).
The net change formula is: Net New MRR = New MRR + Expansion MRR − Contraction MRR − Churned MRR. Tracking each component separately reveals whether growth comes from acquisition or retention.
Track this metric live in your dashboard →Track MRR (Monthly Recurring Revenue) in real time
Varsal connects your tools and shows every metric on a single screen. No code, no spreadsheets — just clarity.
Start free trial →