What this calculator measures
Monthly recurring revenue normalizes contracted recurring subscription revenue into a monthly value. It excludes one-time setup, services, hardware, and other non-recurring revenue unless those amounts are intentionally part of the recurring contract.
This calculator begins with existing customers multiplied by average monthly revenue, then adds new and expansion MRR and subtracts churned MRR. Use consistent definitions for upgrades, downgrades, reactivations, and cancellations.
Common use cases
Use this model when the inputs describe the same decision, period and customer or product scope.
- Calculate ending MRR, net new MRR, and annual recurring revenue from subscription activity.
- Use the result with the recorded inputs: Existing customers, Average monthly revenue per customer, New MRR, Expansion MRR, Churned MRR.
- Compare multiple scenarios before making a marketing decision.
Formula
MRR normalizes recurring subscription revenue into a monthly operating view.
Formula breakdown
- Normalize recurring subscription revenue to a monthly basis.
- Separate new, expansion, contraction, reactivation and churn with one policy.
Worked example
Four hundred existing customers at $75 average monthly revenue produce $30,000 of base MRR. Add $5,000 new MRR and $1,800 expansion MRR, then subtract $2,400 churned MRR. Ending MRR is $34,400, net new MRR is $4,400, and simple ARR run rate is $412,800.
Scenario comparison
Starting MRR $50,000 + $8,000 new + $3,000 expansion - $6,000 churn = $55,000 ending MRR.
If churn rises to $10,000 with other movements unchanged, ending MRR is $51,000.
How to interpret the result
ARR is calculated as ending MRR multiplied by 12; it is a run-rate view, not a forecast of recognized annual revenue. Seasonality, future churn, usage changes, and contract timing can make actual revenue different.
Track the components behind net new MRR. The same net increase can come from strong acquisition with high churn or moderate acquisition with excellent retention, which imply different business health.
What a good result looks like
Healthy MRR growth is durable and supported by retention rather than only rising acquisition spend.
Track both total change and the components causing it.
Common mistakes
- Including non-recurring setup or service revenue.
- Mixing bookings, cash collected and recurring revenue.
When this metric can mislead you
MRR can grow while CAC rises or gross margin falls.
Annual contracts can distort comparisons if monthly normalization is inconsistent.
How to use the result in a decision
Use the MRR bridge to identify whether growth comes from acquisition, expansion or retention.
Pair it with churn, NRR, CAC and payback analysis.
Assumptions and limitations
- ARPU and customer count use a consistent recurring-revenue definition.
- New, expansion, and churned MRR refer to the same month.
- One-time revenue is excluded.
- ARR is a simple 12-month run rate without future growth or churn assumptions.