What is a 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
- 1. Determine the total number of customers you have for each subscription plan.
- 2. 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.
- 3. 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)