Monthly recurring revenue (MRR) is the predictable subscription revenue a company earns each month from active recurring plans. It excludes one-time fees and uncommitted usage, and is the monthly view of recurring run-rate.
MRR is the operational pulse of a subscription business. Where ARR is the annual headline for boards and investors, MRR is the month-to-month number product and finance teams watch to see growth, churn, and expansion as they happen.
How Monthly recurring revenue (MRR) works
MRR sums the monthly value of every active recurring plan. An annual contract is divided by twelve to express its monthly contribution; a monthly plan counts at its monthly price. Recurring add-ons are included; one-time fees and uncommitted usage are not.
Teams break MRR into movement to see what drives change month over month:
- New MRR from new customers.
- Expansion MRR from upgrades and seat or plan increases.
- Contraction MRR from downgrades.
- Churned MRR from cancellations.
Net new MRR is new plus expansion minus contraction minus churn. Net MRR movement is the clearest signal of underlying health.
Monthly recurring revenue (MRR) examples
A customer on a $99 per month plan adds $99 of MRR. A customer on a $1,200 annual contract adds $100 of MRR ($1,200 ÷ 12). If that customer upgrades to a $1,800 annual plan, expansion MRR is $50 the month the upgrade takes effect.
For a hybrid plan of $200 per month plus metered usage, only the $200 counts as MRR. The usage portion is variable and is tracked as usage revenue, not folded into the recurring run-rate.
Monthly recurring revenue (MRR) vs ARR
| MRR | ARR | |
|---|---|---|
| Window | One month of run-rate | One year of run-rate |
| Audience | Product, growth, finance ops | Board, investors |
| Best for | Monthly-plan businesses | Annual-contract businesses |
| Relationship | MRR = ARR ÷ 12 | ARR = MRR × 12 |
Benefits & when to use it
MRR is the right metric when you need a fast, sensitive read on growth and retention. Its movement breakdown (new, expansion, contraction, churn) turns one number into a diagnosis.
It loses meaning when most revenue is variable. A usage-based billing product earns little fixed monthly revenue, so MRR understates it; consumption revenue is tracked on its own. Hybrid products report MRR for the subscription and usage revenue alongside it.
FAQ
What counts toward MRR?
Only committed, recurring monthly revenue: subscription plans and recurring add-ons. One-time setup fees, professional services, and uncommitted usage overages are excluded because they do not recur predictably.
What is the difference between MRR and ARR?
They measure the same recurring base over different windows. MRR is the monthly run-rate; ARR is the annual run-rate. MRR = ARR ÷ 12. Monthly-plan businesses lead with MRR; annual-contract businesses lead with ARR.
How is usage-based revenue treated in MRR?
It is reported separately. MRR is meant to be predictable, so variable usage is excluded and tracked as usage or consumption revenue, even when it appears on the same invoice as a subscription.
How Credyt handles Monthly recurring revenue (MRR)
Credyt does not compute MRR for you, but for usage- and credit-based products it gives finance the clean inputs MRR depends on. Because Credyt meters usage in real time and attributes revenue per customer, the committed subscription portion stays separate from variable usage, so the recurring run-rate is not contaminated by consumption spikes. Explore Credyt →