Subscription metrics
MRR calculator
Monthly recurring revenue is the value of your active subscriptions normalised to one month. Annual plans divide by twelve.
The full yearly amount, not a twelfth of it.
MRR
$2,913.33
- ARR
- $34,959.96
- MRR × 12.
- Average revenue per user
- $18.21
- MRR divided by every subscriber, monthly and annual.
MRR = (monthly subscribers × monthly price) + (annual subscribers × annual price ÷ 12)
How MRR is calculated
Take every active subscription, convert its price to a monthly amount, and add them up. A monthly plan contributes its own price. An annual plan contributes a twelfth of the yearly amount, because that is what it is worth per month.
A quarterly plan divides by three, and a weekly plan multiplies by 52 and divides by 12. That last one catches people: a month averages 4.345 weeks, so treating it as four undercounts weekly plans by about eight per cent.
What this calculator leaves out
Trials. A trial is revenue nobody has agreed to pay yet, so most definitions exclude it. If you want a figure that includes them, add the trialling subscribers to the monthly count and know that you have made that choice.
Discounts. A customer on a permanent 20% coupon contributes 20% less than their list price. Use an average price that already reflects your discounting, or your MRR will read high by whatever share of the book is discounted.
Tax. If you sell through a merchant of record such as Paddle or Lemon Squeezy, the VAT they collect is not yours. Use the amount before tax.
Usage-based charges. Metered revenue is not recurring in the sense MRR means, because next month's amount is not knowable from this month's. Most people exclude it and report it separately.
A worked example
Say 120 subscribers pay $19 a month, and 40 pay $190 a year. The monthly half contributes $2,280. The annual half contributes 40 × $190 ÷ 12, which is $633.33. MRR is $2,913.33, and ARR is $34,959.96.
Notice that the 40 annual subscribers brought in $7,600 of cash the day they signed, and only $633 of MRR. That gap is why MRR and cash collected are different numbers and should never be used interchangeably.
Why your number will differ from your provider's
Stripe, Polar, Paddle and RevenueCat each compute MRR their own way, and each is defensible. They differ on trials, on past-due subscriptions, on whether fixed-amount coupons are prorated across line items, and on tax.
A few per cent of disagreement is normal. What matters is that your figure is consistent with itself over time and that you can say exactly what it counts when somebody asks.
Questions
- How do you calculate MRR?
- Add up every active subscription normalised to one month. A monthly plan contributes its price, an annual plan contributes a twelfth of the yearly amount, and a quarterly plan contributes a third. Trials are usually excluded because they are revenue nobody has agreed to pay yet.
- Does MRR include annual plans?
- Yes, divided by twelve. An annual plan at $1,188 contributes $99 of MRR. The full $1,188 is cash you collected, not monthly recurring revenue, and keeping the two apart is the point of the metric.
- Is MRR the same as last month's revenue?
- No. A month with many annual renewals brings in a lot of cash without changing MRR, because the book did not grow. MRR is what you are owed per month right now; revenue is what actually arrived in a window.
- Should trials count towards MRR?
- Usually not. A trial is revenue nobody has committed to, so including it overstates the book and makes MRR drop whenever a cohort of trials lapses. Most providers exclude trials from their own MRR figure for the same reason.
- How do you convert a weekly plan to MRR?
- Multiply the weekly price by 52 and divide by 12. A month averages 4.345 weeks, so the common shortcut of multiplying by four undercounts weekly plans by roughly eight per cent.