How do you calculate MRR?

For each plan, divide the price by the number of months it covers (1 for monthly, 3 for quarterly, 12 for annual), apply any discount and multiply by the customers on that plan. Add the plans together. 100 customers at $29 a month plus 50 at $1,200 a year is $2,900 + $5,000 = $7,900 MRR.

How do you calculate ARR from MRR?

Multiply MRR by 12. $9,700 MRR is $116,400 ARR. ARR is a run rate: what a year of revenue looks like if this month's recurring revenue stays the same. It is not last year's booked revenue.

Should annual plans count in MRR?

Yes, spread over twelve months. A $1,200 annual plan adds $100 to MRR every month of the term, even though the customer paid the full amount upfront. Counting the whole $1,200 in the month it was paid would make MRR jump and then fall.

What is the difference between gross and net MRR churn?

Gross MRR churn counts only what you lost: churned plus contraction MRR, divided by starting MRR. Net MRR churn also takes off expansion (and reactivation, if you track it). With $2,500 lost and $3,000 of expansion on $50,000, gross churn is 5% and net churn is −1%.

Do one-time fees count toward MRR?

No. Setup, onboarding, training and other one-off fees are revenue, but they do not repeat, so they stay out of MRR. Usage charges that change every month usually stay out too, unless the contract commits the customer to a monthly minimum; count the minimum.

MRR and ARR Calculator

Add your plans with their price, billing period and number of customers to get monthly recurring revenue (MRR), annual recurring revenue (ARR) and revenue per account. Switch to the second tab to see how MRR moved this month: new, expansion, contraction and churn.

Plans and customers

One row per plan. Quarterly and annual prices are spread over the months they cover. Leave out one-off setup fees.

Plan	Price	Billed	Customers	Discount %	MRR
					$2,900
					$5,000
					$1,800

Up to 50 plans.

Results

MRR

$9,700

ARR

$116,400

$9,700 × 12 = $116,400

Paying customers

170

ARPA

$57.06

Average revenue per account a month: MRR ÷ customers.

What you type is not sent to ParrotNotes. Plan names stay on this page and are not saved.

How to calculate MRR

MRR is the subscription revenue you can count on each month. For each plan, take the price a customer pays, spread it over the months it covers and multiply by the number of customers on it: a monthly plan counts in full, a quarterly plan as a third, an annual plan as a twelfth. Add the plans together.

Example: 100 customers on Starter at $29 a month give $2,900. 50 customers on Pro at $1,200 a year give $1,200 ÷ 12 × 50 = $5,000. 20 customers on Team at $300 a quarter with 10% off give $270 ÷ 3 × 20 = $1,800. MRR = $2,900 + $5,000 + $1,800 = $9,700.

Use the price customers actually pay, after discounts. ARPA, average revenue per account, is MRR divided by paying customers: $9,700 ÷ 170 = $57.06 in the example.

How to calculate ARR

ARR is MRR × 12: $9,700 × 12 = $116,400 in the example. It is the same recurring revenue shown as a yearly run rate, which suits businesses that sell annual contracts.

ARR is not the revenue you booked last year, and not the cash you collected. An annual plan paid upfront brings in a year of cash in one month, but in MRR it counts as one twelfth every month. Growth during the year also means ARR today is higher than the revenue of the past twelve months.

What counts as recurring revenue

Count subscription fees that repeat: monthly, quarterly and annual plans, seats and recurring add-ons, all at the price paid after discounts. Leave out one-off setup, onboarding or training fees, hardware, and usage overages that vary month to month, unless the contract commits the customer to a minimum each month.

Companies define MRR in slightly different ways, and there is no single official rulebook. Trials, paused accounts and contracts signed but not started are the usual grey areas. Pick your rules, write them down and keep them the same each month, so the trend means something.

MRR movement: new, expansion, contraction and churn

MRR changes for four reasons. New MRR comes from new customers. Expansion MRR comes from existing customers paying more: upgrades, extra seats, add-ons. Contraction MRR is existing customers paying less. Churned MRR is what cancelled customers used to pay. Some teams also track reactivation, MRR from former customers who came back.

Ending MRR = starting MRR + new + expansion + reactivation − contraction − churned. Example: $50,000 + $4,000 + $3,000 − $1,000 − $1,500 = $54,500. Net new MRR is $4,500, which is 9% growth for the month.

Gross MRR churn = (churned + contraction) ÷ starting MRR: $2,500 ÷ $50,000 = 5%. Net MRR churn takes expansion off: ($2,500 − $3,000) ÷ $50,000 = −1%. A negative figure is called net negative churn: existing customers grew faster than you lost revenue. For customer churn, net and gross revenue retention, and turning a monthly rate into an annual one, use the churn rate calculator.

MRR in a SaaS sales team

Sales teams are often paid on new and expansion MRR or ARR, while account managers own renewals and contraction. Splitting the month's movement shows which motion is carrying growth: a month with strong new sales and heavy churn needs a different fix from a month with little new business.

To see growth over several months or years, take the start and end MRR to the percentage increase calculator, which also works out a compound annual growth rate.

The results are planning numbers built from what you enter. MRR is a management metric, not an accounting figure; when you report it, say which fees and discounts you counted.

The numbers say how MRR moved. Customer calls say why.

Expansion and churn show up in conversations before they show up in MRR: the request for more seats, the budget cut, the doubt at renewal. Record those calls in ParrotNotes and get the summary and action items, so the reasons sit on record next to the numbers. Free for 100 minutes of recording a month.

Get ParrotNotes free