Monthly Recurring Revenue Calculator
Monthly recurring revenue is the heartbeat metric of any subscription business. It strips out one-off charges and normalizes every plan to a single monthly figure, so you can track the predictable revenue base that funds the company month after month. From MRR you can derive annual recurring revenue and average revenue per account, the two numbers most investors and operators ask for next. Enter your active subscriber count and the average monthly revenue per account, and this calculator returns your MRR, your annual recurring revenue, and the implied revenue per user.
MRR formula
MRR = active subscribers * average revenue per account per month
ARR = MRR * 12
Annual plans should first be divided by 12 to express them as a monthly amount before being included in the average revenue per account.
Working with MRR
- Include only recurring subscription revenue; exclude setup fees and one-off services.
- Normalize annual plans to a monthly figure by dividing the annual price by 12.
- Annual recurring revenue is simply MRR times 12.
- Track new, expansion, contraction, and churned MRR separately to understand movement.
- Average revenue per account is a useful proxy for pricing power and plan mix.
Monthly recurring revenue: frequently asked questions
What is monthly recurring revenue?
Monthly recurring revenue (MRR) is the predictable, normalized subscription revenue a business expects to receive each month. It excludes one-off charges and is the standard top-line metric for subscription businesses, because it smooths annual and multi-month plans into a consistent monthly figure.
How is MRR calculated?
The simplest method is the number of active accounts multiplied by the average revenue per account per month (ARPU). For example, 500 accounts paying an average of US$40 a month gives an MRR of US$20,000. Annual plans should be divided by 12 to normalize them to a monthly basis.
What is the difference between MRR and ARR?
ARR is annual recurring revenue, simply MRR multiplied by 12. MRR is favoured by businesses with shorter billing cycles and frequent plan changes, while ARR is common for enterprise software sold on annual contracts. Both describe the same recurring revenue at different time scales.
Should one-time fees be included in MRR?
No. MRR should only include recurring subscription revenue. Setup fees, one-off professional services, and usage overages that are not contractually recurring are excluded, because the purpose of MRR is to measure predictable, repeatable revenue.
How do annual plans affect MRR?
Annual plans are normalized by dividing the annual price by 12. A US$1,200 annual subscription contributes US$100 to MRR each month, even though the cash is collected once a year. This keeps MRR comparable across monthly and annual billing.
Official sources
- U.S. Small Business Administration: Manage your finances.
- U.S. Securities and Exchange Commission, Investor.gov: Investing glossary.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.