What Is Monthly Recurring Revenue (MRR)?
Monthly recurring revenue (MRR) is the total predictable subscription revenue a business earns each month, normalized to a monthly value. It's the operating heartbeat of a SaaS company — used to track growth month over month and to break revenue into new, expansion, contraction and churned components.
Key takeaways
- MRR normalizes every subscription to a monthly figure (annual plans ÷ 12).
- Net New MRR = New + Expansion − Contraction − Churned MRR.
- Only recurring revenue counts — exclude one-time and non-recurring charges.
The MRR movement formula
Net New MRR = New + Expansion − Contraction − Churned
The four components that explain every change in MRR month to month.
The components of MRR change
| Component | What it captures |
|---|---|
| New MRR | Recurring revenue from brand-new customers |
| Expansion MRR | Upsell, cross-sell and seat growth from existing customers |
| Contraction MRR | Downgrades and reduced seats (still active) |
| Churned MRR | Revenue lost when customers cancel |
Worked example
Start the month at €100,000 MRR. You add €12,000 of New, €4,000 of Expansion, lose €1,500 to Contraction and €3,000 to Churn. Net New MRR is €11,500, so you end the month at €111,500 — and you can see exactly which lever drove the result.
Frequently asked questions
How do you calculate MRR?
Sum the normalized monthly value of every active subscription. Convert annual contracts to monthly by dividing by 12, and exclude any one-time or non-recurring fees.
What is committed MRR (CMRR)?
CMRR adjusts MRR for known future changes — signed contracts not yet started, and churn you already know is coming — to give a more forward-looking run rate.
MRR vs ARR — which should I use?
Use MRR if you sell mostly monthly and want month-over-month resolution; use ARR if you sell annual contracts. They're the same revenue at different cadences.
Related service: Automate MRR reporting in HubSpot