Monthly recurring revenue (MRR)

What is monthly recurring revenue (MRR)?

Monthly Recurring Revenue (MRR) is the predictable income a business generates each month from active subscriptions or recurring billing customers. It’s a key metric for subscription-based businesses and SaaS companies, offering a clear picture of financial stability and growth.

MRR reflects total monthly subscription payments, excluding one-time fees, discounts, or variable charges. For example, if your business has 100 customers each paying $20 per month, your MRR would be $2,000. This metric helps businesses track revenue trends, forecast growth, and make informed decisions about pricing and retention.

Monthly recurring revenue model

This model is widely used in subscription businesses like software services, streaming platforms, or subscription boxes. It helps in forecasting revenue, making budget decisions, and measuring growth over time.

How to calculate MRR

MRR = Total number of active subscribers × Average monthly revenue per user (ARPU)

Example of monthly recurring revenue (MRR)

A fitness app with 500 subscribers paying $10 per month would generate $5,000 in MRR.

Driftcharge Tip

Monitoring MRR over time helps you understand customer growth, churn trends, and the impact of pricing or promotions. It’s essential for forecasting and scaling.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.