Glossary · Finance
What is Monthly Recurring Revenue (MRR)?
Definition
Monthly recurring revenue (MRR) is the predictable income your business earns each month from subscriptions, retainers, and other repeating payments.
MRR = number of paying customers × average monthly price
Why it matters
MRR is the heartbeat of subscription and retainer businesses. Because it repeats, it is easier to forecast, budget, and plan hiring around than one-off sales.
A social media manager has 6 clients paying $500 a month, 2 paying $800, and 1 paying $1,200. MRR is 3,000 plus 1,600 plus 1,200, or $5,800. Losing the $1,200 client drops MRR by about 21 percent, which shows how concentrated the revenue is.
Do not include one-time setup fees or project work in MRR. Track new, expansion, and lost MRR separately to see exactly what is driving growth.
Common mistakes
- !Including one-time fees, which inflates the predictable portion of revenue.
- !Relying on one or two large clients without a plan if they leave.
Frequently asked questions
What is Monthly Recurring Revenue (MRR)?
Monthly recurring revenue (MRR) is the predictable income your business earns each month from subscriptions, retainers, and other repeating payments.
How do you calculate MRR?
MRR = number of paying customers × average monthly price
What mistakes do beginners make with MRR?
Including one-time fees, which inflates the predictable portion of revenue. Relying on one or two large clients without a plan if they leave.
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