MRR Calculator

How MRR is calculated

Monthly recurring revenue is the sum of every active subscription expressed as a monthly figure. For each plan the formula is customers × price ÷ months in the billing period, and the plan totals are added together:

MRR = Σ (customers on plan × monthly-equivalent price)

The normalisation step is the part most spreadsheets get wrong. An annual plan billed at $490 is $40.83 of MRR every month for twelve months — not $490 in the month the invoice cleared. Booking the full contract on the billing date creates a spike followed by eleven months of apparent decline, which makes churn look worse than it is and growth look lumpier than it is.

Two definitions matter before you type a number in:

• Customers means active paying subscriptions on that plan at the end of the period. Free accounts, trials that have not converted, and lapsed subscriptions in a dunning grace period are excluded.
• Price means the amount actually billed after any discount, excluding sales tax and VAT. If half a plan is on a 20% partner discount, split it into its own row at the discounted price rather than averaging.

The five MRR movements

A single MRR figure tells you the size of the business. The movements tell you whether it is healthy. Every dollar of change between last month and this month lands in exactly one of these buckets:

• Starting MRR — the recurring revenue on the books on day one of the period. Every ratio below is measured against it.
• New MRR — recurring revenue from customers who paid you for the first time in this period. Net new logos only: a customer who cancelled in March and came back in June is usually counted as new again, but pick one convention and hold it.
• Expansion MRR — extra recurring revenue from customers you already had. Upgrades, added seats, add-on modules, and price increases that took effect this period.
• Contraction MRR — recurring revenue lost from customers who stayed but pay less. Downgrades, removed seats, discounts granted at renewal.
• Churned MRR — recurring revenue lost from customers who cancelled entirely. If they still have one paid seat left they are contraction, not churn.

Net new MRR = new + expansion − contraction − churned, and ending MRR = starting MRR + net new MRR. If your ending MRR does not match the MRR you get from the plan mix at the top of this page, a movement has been miscategorised — that reconciliation is the most useful thing this calculator does.

How to read the result

Net new MRR is the headline: positive means the business grew this period. But a small positive number sitting on top of large gross churn is a leaky bucket — you are buying customers to replace the ones leaving, and acquisition spend is funding replacement rather than growth.

Net revenue retention (NRR) measures the existing base only — expansion minus contraction and churn, as a share of starting MRR, with new customers excluded. At 100% the base pays for itself without a single new logo; strong product-led and enterprise businesses run 110–130%. Gross revenue retention strips expansion out, so it can never exceed 100% and shows how much you would keep if nobody upgraded.

The quick ratio — (new + expansion) ÷ (contraction + churned) — compares everything you gained to everything you lost. Around 4:1 is the widely quoted marker of efficient growth; below 1:1 the business is shrinking no matter how much you spend on acquisition.

Once you know your MRR and ARPU, the next questions are what a customer is worth and what you can afford to spend winning one. Work those out with the CAC payback calculator and the SaaS metrics calculator, which turns ARPU and churn into LTV and LTV:CAC.