MRR (Monthly Recurring Revenue) is the total predictable subscription revenue a business earns each month, normalized to a monthly figure. It counts only recurring charges — subscriptions and recurring add-ons — and excludes one-time fees. For SaaS, MRR is the core measure of revenue health and the foundation of revenue-based attribution.
How to calculate MRR.
MRR = number of active subscriptions × ARPA (average revenue per account), or equivalently, the sum of every active subscription's monthly recurring value.
Normalize non-monthly plans first — divide an annual plan by 12, a quarterly plan by 3. Then MRR breaks down into five movements that explain how it changes month to month:
New + Expansion + Reactivation
− Contraction − Churned
- New MRRFrom newly acquired customers
- Expansion MRRUpgrades and seat growth from existing customers
- Reactivation MRRPreviously churned customers returning
- Contraction MRRDowngrades (reduces MRR)
- Churned MRRCancellations (reduces MRR)
MRR example.
Start with 100 customers each paying $149/mo:
- Starting MRR (100 × $149)
- $14,900
- + New MRR (10 new customers)
- +$1,490
- + Expansion MRR (upgrades)
- +$600
- − Contraction MRR (downgrades)
- −$150
- − Churned MRR (2 cancellations)
- −$298
- Net new MRR
- +$1,642
- Ending MRR
- $16,542
Why MRR matters for attribution.
For subscription businesses, MRR — not trial signups or pixel events — is the revenue you should attribute to marketing. A channel that produces cheap trials but little MRR is losing money; one that produces fewer, higher-MRR customers who expand is winning. You can only see that difference when attribution is measured in MRR.
That's why Signal Sparrow uses Stripe MRR as the source of truth: it syncs MRR, expansion and churn and reconciles revenue attribution to it, to the cent — so every campaign is judged on the recurring revenue it actually produced.
