Monthly Recurring Revenue
Monthly recurring revenue is the number of active subscribers times average revenue per user per month.
Formula
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Example
500 subscribers × $30: MRR = $15,000
How it works
Monthly recurring revenue (MRR) estimates the predictable revenue a subscription business should earn in a typical month. It works by multiplying the number of active paying customers by the average amount each one pays per month, so it captures the recurring part of revenue rather than one-time sales. This is useful because subscription income tends to scale mainly with customer count and average spend per customer.
When to use it
Use this formula for SaaS products, membership businesses, and other subscription services where customers pay on a recurring monthly basis. It is especially helpful for tracking growth, forecasting cash flow, and comparing performance month to month.
Worked example, step by step
Step 1: Count the active subscribers. N = 1,200 Step 2: Find the average revenue per user per month. ARPU = $18 Step 3: Multiply them. MRR = N × ARPU MRR = 1,200 × 18 MRR = $21,600 Final answer: the monthly recurring revenue is $21,600.
Common mistakes to avoid
- Using total revenue from one-time purchases instead of only recurring monthly income
- Mixing daily, weekly, or annual revenue figures with a monthly formula without converting them first
- Counting inactive, churned, or trial customers as active subscribers
Did You Know?
MRR turns lumpy subscription sales into a predictable monthly figure — the heartbeat of every SaaS business.
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BasicNet revenue is gross revenue less returns, refunds and discounts — the amount actually recognised.
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