MRR (monthly recurring revenue): formula, calculator and growth benchmarks
What is MRR?
MRR (monthly recurring revenue) is the subscription revenue a company can expect each month from active customers, with annual plans spread by month and one-time fees left out. Each month: MRR = last month's MRR + new + expansion − contraction − churn. MRR × 12 = ARR.
Key facts
- ChartMogul's definition: "the normalized, predictable revenue a subscription business expects each month from active customers, excluding one-time fees." (ChartMogul)
- Annual plans are spread by month. Stripe's example: "an annual subscription for $1,200 only counts $100 towards your MRR." (Stripe)
- Stripe Billing leaves metered usage out of MRR "as the revenue can fluctuate significantly and is not predictable". (Stripe)
- At $1M of ARR, companies that went on to reach $20M were growing MRR 16.7% a month on average, against 8.7% for the rest, in ChartMogul's data. (ChartMogul, 2025)
- Shopify, which reports MRR as a key metric, had MRR of $221 million at 30 June 2026, up 19% in a year. (Shopify, 10-Q)
MRR calculator
Enter last month's MRR and this month's movements: new customers, expansion, downgrades and cancellations. The calculator rolls MRR forward and gives net new MRR, the monthly growth rate and the SaaS quick ratio.
Want the MRR bridge from your real billing data? CX Cash is being built to track new, expansion, contraction and churned MRR every month, next to your cash.
Get started free (opens in a new tab) See MRR growth tracking in CX Cash
How to calculate MRR
MRRₜ = MRRₜ₋₁ + New + Expansion − Contraction − Churn
In words: start from last month's recurring revenue, add new customers and upgrades, and take off downgrades and cancellations.
- New: Recurring revenue from customers who started paying this month.
- Expansion and contraction: Upgrades, extra seats and price increases, minus downgrades, from existing customers.
- Churn: The monthly recurring revenue of customers who cancelled.
Worked example
An illustrative company starting the month with $100,000 of MRR. New customers add $10,000, existing customers upgrade by $3,000 and downgrade by $1,000, and $2,000 cancels. The results below are computed by the calculator's tested code.
| Input | Value |
|---|---|
| MRR at the start of the month | $100,000 |
| New MRR from new customers | $10,000 |
| Expansion MRR | $3,000 |
| Contraction MRR | $1,000 |
| Churned MRR | $2,000 |
MRR at month end: 110,000 Net new MRR: 10,000Month-on-month growth: 10.0%SaaS quick ratio: 4.33
Quick ratio = (10,000 + 3,000) ÷ (2,000 + 1,000)
MRR ends the month at $110,000, up 10%, with $10,000 of net new MRR. The company added $13,000 for every $3,000 it lost, a quick ratio of 4.33. At 10% a month, MRR would roughly triple in a year (our arithmetic).
In a spreadsheet
- MRR this month, with last month in B2 and new, expansion, contraction and churn in C2:F2: =B2+C2+D2-E2-F2
- MRR of an annual plan, with the annual price in B2: =B2/12
- Monthly MRR growth, with this month in B3 and last month in B2: =B3/B2-1
- Annual growth equivalent to a monthly rate in B2: =(1+B2)^12-1
How founders and investors read MRR
If you're the founder
- Track the movements, not just the total. ChartMogul breaks MRR into "five movements: New Business, Expansion, Contraction, Churn, and Reactivation"; investors will ask which one drove the month.
- Check it against cash. Jason Lemkin's test: "If your cash collections are < MRR, your MRR is wrong. Trust me here." (SaaStr, 2022).
- Keep usage separate. If part of your revenue is usage-based, report it next to subscription MRR, not inside it, unless you say so.
Questions you'll be asked
- How do you treat annual prepayments and discounts?
- What share of MRR is usage-based?
- What was net new MRR in each of the last six months?
- How much of new MRR came from price increases?
If you're the investor or LP
- Ask how it's built. Stripe uses active subscriptions, "rather than summing your invoices", because MRR "is a forward-looking metric".
- Look at the bridge. A steady total can hide rising churn offset by new sales; Christoph Janz's warning: "MRR churn sucks the blood out of your business".
- Compare monthly growth with the company's size. A rate that's strong at $50,000 of MRR is exceptional at $5M.
Questions to ask the company
- What is the MRR bridge (new, expansion, contraction, churn) by month?
- How does MRR reconcile with billings and cash collected?
- Which customers or plans drive expansion?
- Are trials, discounts or usage included, and how?
What is a good MRR growth rate?
MRR growth depends on size: young companies grow fastest month to month. The best published data is ChartMogul's study of companies at $1M of ARR; for larger companies, convert annual growth benchmarks into monthly rates.
Benchmarks
| Segment | Measure | Typical | Top quartile | As of | Sample | Source |
|---|---|---|---|---|---|---|
| Monthly MRR growth · ChartMogul's figures are averages (means) at the $1M ARR milestone, not medians. | ||||||
| At $1M ARR, later reached $20M | Monthly MRR growth | 16.7% a month on average | — | Nov 2025 | 6,525 software companies (ChartMogul) | ChartMogul, 2025 |
| At $1M ARR, all others | Monthly MRR growth | 8.7% a month on average | 20.1% a month | Nov 2025 | 6,525 software companies (ChartMogul) | ChartMogul, 2025 |
| Annual growth, converted · Our arithmetic converts each annual rate to a compound monthly rate. | ||||||
| Private B2B SaaS | Median revenue growth | 22% a year (about 1.7% a month) | — | FY 2025 | More than 1,000 companies (SaaS Capital) | SaaS Capital, 2026 |
| B2B SaaS and AI-native | Median ARR growth | 20% a year (about 1.5% a month) | 42% a year (about 3.0% a month) | CY 2025 | 338 companies (Benchmarkit) | Benchmarkit, 2026 |
| Shopify | MRR growth | 19% a year (about 1.5% a month) | — | 30 Jun 2026 | One public company | Shopify, 10-Q |
Fast monthly growth early matters, but not as much as it looks. ChartMogul found "the top 25% of normies outpaced more than half of the outliers".
A month is noisy. Look at the trend over three to six months before reading anything into one.
Compiled Oct 2, 2026. Next review: March 2027. Left out: ChartMogul's 2022 growth-rate article (Undated update of older data; superseded by its 2025 study); High Alpha 2025 (Marked proprietary and confidential; we don't reproduce its tables). Download these benchmarks as CSV.
MRR in the wild: what counts, according to the people who compute it
Two billing platforms and four public companies on the choices that change MRR. Shopify explains why it reports MRR at all: "we believe Monthly Recurring Revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships". (Shopify, 10-Q)
| Who | Annual plans | Usage | Trials and other choices | Source |
|---|---|---|---|---|
| Stripe Billing | Spread by month ($1,200 a year counts $100) | Excluded (metered billing) | Trials excluded; discounts your choice | Support article |
| ChartMogul | Split by the number of months | Not stated | One-time fees excluded | Metrics library |
| Shopify | Value of subscription plans in effect | Excluded ("variable platform fees") | Paid trials at the trial price; free trials excluded | 10-Q, Aug 2026 |
| Datadog | Committed contractual amounts | Included ("additional usage") | MRR × 12 gives its ARR | 10-K, Feb 2026 |
| GitLab | Committed subscription amounts | Committed amounts only | Professional services excluded | 10-K, Mar 2026 |
| Atlassian | Committed contractual amounts (Cloud MRR) | Committed amounts only | Cloud MRR × 12 gives its Cloud ARR | 10-K, Aug 2026 |
Everyone spreads annual plans and drops one-time fees. The differences are usage, trials and discounts: Datadog counts usage in MRR, Stripe and Shopify leave it out, and Shopify counts paid trials at their trial price.
Definitions are each company's own, as published. SEC filings were read from archived copies because sec.gov blocks automated access; the links go to EDGAR.
MRR vs ARR, revenue, bookings and cash
| Metric | Answers | Ignores | Use it when | It misleads when |
|---|---|---|---|---|
| MRR | Recurring revenue expected this month | One-time fees, and usually usage | Tracking month-to-month movements | Annual prepayments are counted in the month paid |
| ARR | The same recurring revenue, per year | Month-to-month movement | Annual contracts, and measuring scale | Usage or signed-not-live deals are counted |
| GAAP revenue | Revenue recognized in the period | Contracted value not yet recognized | Financial statements | Set directly against MRR |
| Bookings | Value of contracts signed in the period | When the revenue is earned | Sales performance | Multi-year deals are counted as one month's MRR |
| Cash collected | Money received in the period | What the payments are for | Runway and a sanity check on MRR | Annual prepayments land in one month |
ARR = MRR × 12. Net new MRR = new + expansion − contraction − churn, and the SaaS quick ratio divides the gains (new + expansion) by the losses (contraction + churn).
Common mistakes: how MRR gets flattered
- Counting annual prepayments in the month they're paid. A $12,000 annual deal is $1,000 of MRR, not $12,000 this month. Spread it.
- Including one-time fees. Setup, onboarding and services fees don't recur. ChartMogul: "MRR excludes one-time fees like setup charges. Only recurring subscription revenue counts."
- Building MRR from bookings. a16z warned in 2015: "Often, people will multiply one month's all-in bookings by 12 to get to ARR." The same mistake inflates MRR.
- Counting free trials. Stripe: a trialing subscription "does not count towards your Monthly Recurring Revenue (MRR), as the subscription is not active".
- Ignoring discounts. List price overstates what customers pay. Subtract discounts, or say you don't.
- Mixing in usage without saying so. Usage can swing month to month. Report it separately, as Stripe's newer usage-based MRR reporting does.
Where MRR came from and how it's regarded today
| When | What happened | Source |
|---|---|---|
| 2026 | Stripe previews separate usage-based MRR reporting, keeping usage apart from subscription MRR. | Stripe Docs |
| Jan 2025 | Ray Rike predicts hybrid pricing, a subscription floor plus usage upside, will become the norm. | Bowery Capital, 2025 |
| Dec 2022 | Jason Lemkin: "MRR is just a monthly snapshot of your recurring revenue for this month". | Lemkin, 2022 |
| Aug 2022 | ChartMogul retires its alternative churn-rate formula, standardizing MRR churn calculations. | ChartMogul Help Center |
| Aug 2015 | a16z warns against building recurring revenue from all-in bookings. | a16z, 2015 |
| Feb 2015 | Christoph Janz argues that most SaaS startups should aim for negative MRR churn. | Janz, 2015 |
| Jan 2013 | David Skok makes MRR the primary metric for SaaS businesses on monthly contracts. | Skok, 2013 |
| May 2012 | Skok's model of churn and negative churn is built on MRR. | Skok, 2012 |
How it's regarded today
- Usage is pulling apart from MRR. Billing platforms now report usage-based revenue separately, and many companies price with a subscription floor plus usage on top.
- Still a public-company metric. Shopify reports MRR in its 10-Q as the measure "most closely correlated with the long-term value of our merchant relationships".
- The bridge matters more than the total. ChartMogul's reporting splits MRR into new business, expansion, contraction, churn and reactivation, and investors increasingly ask for that bridge.
- Growth Levers: The Path from $1M to $20M ARR (ChartMogul, 2025). MRR growth at $1M ARR for companies that later reached $20M ARR and for the rest, across 6,525 companies.
- Understanding Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) (Stripe). How a large billing platform treats usage, trials, taxes and discounts in MRR.
- Form 10-Q for the quarter ended 30 June 2026 (Shopify, 10-Q). A public company's MRR definition, and why it prefers MRR to deferred revenue.
What experts say about MRR
“In the future, I see hybrid pricing as where a lot of pricing will net out - the subscription piece can provide a floor for forecasting and predictability for investors and CFOs but then the usage component allows the company to get some upside exposure.”
“This is SaaS, and so if you are growing, your cash collections should at least exceed your MRR each month. Ideally, cash should be 110% or more of MRR.”
“Having significant account churn doesn't necessarily have to be a big problem and can't be avoided completely anyway. MRR churn sucks the blood out of your business though.”
MRR FAQ
What is monthly recurring revenue?
MRR is the subscription revenue a company can expect each month from its active customers. Annual plans are divided by 12, and one-time fees such as setup or services are left out.
How do you calculate MRR?
Add up the monthly value of every active subscription. To roll it forward, take last month's MRR, add new and expansion MRR and subtract contraction and churn: $100,000 + $10,000 + $3,000 − $1,000 − $2,000 = $110,000.
What is net new MRR?
The month's change in MRR: new + expansion − contraction − churn. It tells you whether the base grew and why.
What is the difference between MRR and ARR?
They measure the same recurring revenue over different periods: ARR is MRR × 12. Monthly-plan businesses usually track MRR; companies on annual contracts usually report ARR.
Is MRR the same as revenue?
No. MRR is a forward-looking snapshot of active subscriptions; revenue is what accounting rules recognize over a period. Stripe calls MRR "a forward-looking metric that is distinct from the immediate cash flow".
How do I count annual plans in MRR?
Divide the annual price by 12. Stripe's example: "an annual subscription for $1,200 only counts $100 towards your MRR."
What is a good MRR growth rate?
It depends on size. At $1M of ARR, companies that later reached $20M grew 16.7% a month on average in ChartMogul's data, and the rest 8.7%. For larger companies, a 20% annual growth rate is about 1.5% a month.
Related metrics and guides
Sources
Every link was opened and checked. Archived copies guard against links that move or disappear.
Primary data
- Form 10-Q for the quarter ended 30 June 2026. Shopify Inc. (SEC filing), 5 Aug 2026. Read from the archived copy. Archived copy
- Form 10-K for the fiscal year ended 31 December 2025. Datadog (SEC filing), 18 Feb 2026. Read from the archived copy. Archived copy
- Form 10-K for the fiscal year ended 31 January 2026. GitLab (SEC filing), 17 Mar 2026. Read from the archived copy. Archived copy
- Form 10-K for the fiscal year ended 30 June 2026. Atlassian (SEC filing), 14 Aug 2026. Read from the archived copy. Archived copy
- Growth Levers: The Path from $1M to $20M ARR. ChartMogul (Kyle Poyar), 5 Nov 2025. Vendor data; averages, not medians. Archived copy
- 2026 Private B2B SaaS Company Growth Rate Benchmarks. SaaS Capital, 2026. Lender's survey; the detailed PDF is gated. Archived copy
- 2026 SaaS and AI Metrics Benchmarks. Benchmarkit, 1 Jun 2026. Sponsored report. Archived copy
Practitioner
- Monthly Recurring Revenue (MRR). ChartMogul (SaaS metrics library), Updated 8 Sep 2026. Vendor guide. Archived copy
- Revenue churn (net and gross revenue churn rate). ChartMogul (SaaS metrics library), Updated 8 Sep 2026. Vendor guide. Archived copy
- Report: Gross MRR Churn Rate. ChartMogul, Undated. Vendor documentation. Archived copy
- Understanding Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR). Stripe (support article), Modified 12 Sep 2026. Vendor documentation. Archived copy
- Calculating Monthly Recurring Revenue (MRR) in Billing. Stripe (support article), Modified 12 Sep 2026. Vendor documentation. Archived copy
- Analytics (Billing). Stripe Documentation, Undated. Vendor documentation. Archived copy
- Unlocking the Path to Negative Churn. David Skok (For Entrepreneurs), 7 May 2012. Archived copy
- SaaS Metrics 2.0 - A Guide to Measuring and Improving what Matters. David Skok (For Entrepreneurs), 16 Jan 2013. Archived copy
- 16 Startup Metrics. Jeff Jordan, Anu Hariharan, Frank Chen and Preethi Kasireddy (Andreessen Horowitz), 21 Aug 2015. Archived copy
- Why (most) SaaS startups should aim for negative MRR churn. Christoph Janz (The Angel VC), Feb 2015. Archived copy
- 6 Important Things Founders Get Wrong In Their Core Metrics. Jason Lemkin (SaaStr), 15 Dec 2022. Practitioner opinion. Archived copy
- SaaS Perspectives: Ray Rike (Benchmarkit & SaaS Barometer). Bowery Capital (interview by Patrick McGovern), 15 Jan 2025. Interview; no archived copy found.
Changes to this page
- · Major · Page published. Benchmarks and filings compiled 2 October 2026.
Cite this page
Dominique Bouillet, "MRR (monthly recurring revenue): formula, calculator and growth benchmarks", CX Cash, updated Oct 19, 2026, https://cxcash.com/metrics/mrr
CX Cash builds software for founders and investors. This page is education, not investment advice. Third-party figures link to their source, and our own arithmetic and illustrative examples are labelled as such.