Glossary

What is MRR?

2 min read

Monthly recurring revenue is the value of your active subscriptions, normalised to one month. It is a snapshot of the book as it stands, not a total of what arrived in the last thirty days.

How MRR is calculated

Take every active subscription, convert its price to a monthly amount, and add them up.

Billing interval Monthly contribution
Monthly The amount
Annual Divided by twelve
Quarterly Divided by three
Weekly Multiplied by 52, divided by 12
Daily Multiplied by 365.25, divided by 12

The weekly row is the one people get wrong. A month is 4.345 weeks on average, not four, so multiplying a weekly price by four undercounts it by about eight per cent.

What MRR is not

Not last month's revenue. A month with many annual renewals brings in enormous cash and does not change MRR at all, because the book did not grow.

Not a sum over a window. MRR is what you are owed per month right now. Asking for "MRR over the last 90 days" is asking a question with no answer.

Not ARR divided by anything other than twelve. ARR is MRR times twelve, by definition. Anything smoothed or annualised differently is a forecast wearing a metric's name.

Why two MRR figures disagree

Every provider and every tool makes a handful of choices, and every choice moves the number a per cent or two.

  • Trials. Counted, or not? Most exclude them, because a trial is revenue nobody has agreed to.
  • Past due. A card is failing and dunning is retrying. Still revenue, or already lost?
  • Discounts. Percentage coupons usually applied. Fixed-amount coupons often not, because prorating one across a multi-item subscription needs data most APIs do not return.
  • Tax. A merchant of record collects VAT that is not yours. Including it inflates MRR by whatever your customers' rates average.
  • Usage-based prices. Not priceable in advance. Guessed, or flagged?

None of these has a right answer. What matters is writing yours down, keeping it, and being able to say what your figure counts when somebody asks.

MRR in Notch Metrics

Seven connectors report it, each using their provider's own definition where one exists: Stripe, Polar, Paddle, Dodo Payments, Lemon Squeezy and RevenueCat.

Each page states exactly what that provider's figure includes, because MRR is always somebody's definition and the whole point is knowing whose.

How to calculate MRR from the Stripe API

Questions

What does MRR stand for?
Monthly recurring revenue. It is the value of your active subscriptions normalised to one month, as a snapshot of the book right now rather than a total of what arrived recently.
How do you convert an annual plan to MRR?
Divide by twelve. An annual plan at $1,188 contributes $99 of MRR. A quarterly plan is divided by three, and a weekly plan is multiplied by 52 and divided by 12, because a month averages 4.345 weeks rather than four.
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 arrived in a window.
Why do two tools report different MRR for the same account?
Because each makes choices about trials, past-due subscriptions, discounts, tax and usage-based prices. None of those has a single right answer. What matters is writing your definition down and keeping it.
Should trials count towards MRR?
Usually not. A trial is revenue nobody has agreed to pay yet, so most providers and tools exclude them. Lemon Squeezy's own active subscriber count is a notable exception that counts trials in.