What is Monthly Recurring Revenue?
Often referred to simply as MRR
, monthly recurring revenue is the amount of total monthly revenue generate from subscriptions.
This does not include one-time setup, onboarding or other non-recurring fees generated from a subscription. This non-recurring revenue should be reported under a separate P&L line item.
How to Calculate Monthly Recurring Revenue
Determine the total number of customers you have for each subscription plan.
If you have customers who have paid in advance on a multi-month subscription plan, then divide the total subscription value by the number of months in the plan.
Add all of the subscription values together to get the total monthly revenue.
You have 1000 total subscribers. 500 of them have subscribed to the $10 starter plan payable monthly. The other 500 customers have purchased the $300 premier plan billed annually.
(500 x $10) + (500 x $300/12) = $17,500
Simple MMR Formula Cheatsheet
Annual or paid-in-advance subscription payment:
MRR = (Prepaid subscription revenue/number of months) x number of customers)
Monthly subscription payment:
MRR = (Monthly subscription revenue x number of customers)