Monthly recurring revenue (MRR)

How to calculate MRR

Take every subscription that is active today. Convert its price to a monthly amount. Add them up.

1. Monthly plans count at their price.
2. Annual plans count at the price ÷ 12. A $59.99 annual plan adds $5.00 of MRR.
3. Quarterly plans count at the price ÷ 3. Six-month plans count at the price ÷ 6.
4. Weekly plans count at the price × 52 ÷ 12, which is about 4.33 weeks per month. Do not multiply by 4, or you lose a month of revenue each year.

Use the price the customer actually pays. If someone is on a 50% introductory discount, count the discounted amount until the full price starts.

Worked example

A fitness app sells three plans. On September 30 it has these active subscribers:

The annual subscribers paid $71,991 up front, but only $5,999.25 of that counts toward MRR each month. The weekly plan has the fewest subscribers and still brings in more MRR than the annual plan.

MRR calculator

Enter your monthly, annual, weekly, and quarterly plans. For several price points, use the full MRR and ARR calculator.

What to leave out of MRR

MRR only counts revenue that repeats on its own. Leave out:

• One-time in-app purchases. Consumables, unlocks, and lifetime plans do not renew.
• Ad revenue. It changes with usage, not with a subscription.
• Free trials. A trial adds MRR on the day of the first paid charge, not when it starts.
• Sales tax and VAT. You collect them for the government.
• Refunded subscriptions. Remove the MRR when the refund ends access.

Gross or net of store fees

The App Store and Google Play keep a commission on each subscription, commonly 15% or 30% depending on the program. Web payments have card fees instead. You can report MRR at the price customers pay (gross) or at what you receive (net). Both are valid. Pick one, write it down, and use it for every platform and every month.

MRR movements

The total alone hides what changed. Split each month's change into four parts:

MRR on August 31 is $38,000. If net new MRR is flat while new MRR grows, churn is eating your acquisition. The churn rate guide shows how to measure that loss as a percentage.

ARR vs MRR

ARR and MRR measure the same thing at different scales. ARR is a run rate. It tells you what a year would bring if nothing changed. It is not a forecast, because new subscribers and churn will change it.

Businesses with annual contracts often report ARR. Consumer apps with monthly and weekly plans usually watch MRR, because it shows changes month by month.

Common mistakes

• Counting an annual payment in the month it arrives. That is cash, not MRR. Spread it over 12 months.
• Mixing gross and net. Store reports often show proceeds after fees, and web reports show the full price. Convert them to one basis before you add them.
• Mixing currencies at different rates. Convert all currencies with one set of rates, or small exchange moves look like growth.
• Removing a subscriber at cancellation. A customer who turns off auto-renew keeps paid access until the period ends. A common choice is to keep that MRR until access ends, then count it as churned. Do the same thing every month.

MRR in subscription apps

App revenue arrives from the App Store, Google Play, and often a web checkout, each with its own report format. Each store also retries failed renewals during a grace period, so a subscriber can be unpaid but not yet lost. Count that subscriber as churned only when access ends.

Questions

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