Revenue Metrics

MRR: Monthly Recurring Revenue

The predictable monthly revenue from active subscriptions, normalised to a monthly figure.

Definition

Monthly Recurring Revenue (MRR) is the total predictable revenue a business earns every month from active subscription or contract relationships, normalised to a single month. MRR strips out one-off payments, set-up fees and professional services revenue to give a clean view of the recurring revenue engine.

Formula

MRR = sum of all active monthly recurring subscription values

MRR = Σ (monthly subscription value per active customer)

Worked example

100 customers each paying £500 per month produces £50,000 MRR. If 10 new customers sign at £500 per month next month, New MRR is £5,000 and total MRR becomes £55,000.

Why it matters

MRR is the heartbeat of any subscription business. Boards, investors and revenue leaders all forecast in MRR because it is predictable and compounds. Movements in MRR (new, expansion, contraction, churn, reactivation) tell you precisely where growth is coming from and where it is leaking.

Common mistakes

  • Including one-off implementation fees in MRR (these are services revenue, not recurring)
  • Counting a 12-month upfront payment as £6,000 of MRR in month one (it should be £500/month)
  • Reporting gross new MRR without netting off contraction and churn

Related terms

ARRNRRChurnACV

Read more in The Guide

Chapter: Metrics That Matter →

Sources & further reading

  • — Drawn from Evara's working definitions used on retained search and revenue advisory engagements (2024–2026).
  • — Reconciled against industry conventions in SaaStr, OpenView SaaS Benchmarks and Bessemer State of the Cloud.
  • — Reviewed by Rich Evans, Strategic Advisor at Evara and former operator/founder.

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