MRR (monthly recurring revenue) is the sum of the monthly-normalized value of all active subscriptions at a point in time. Annual plans are divided by 12, taxes and one-time charges are excluded, and a cancelled subscription stops counting the moment it churns. Tracking how MRR moves, not just its level, is what makes it useful.
What is MRR?
Stripe defines MRR as the sum of the monthly-normalized value of all active and past-due subscriptions, excluding taxes, free plans and metered usage; when a subscription is cancelled or marked unpaid it counts as churn and leaves MRR.1Source 1 · Stripe DocsBilling analytics: metric definitions (MRR)docs.stripe.com In their example, 100 subscribers at $100 per month plus 50 subscribers at $600 per year give (100 × $100) + (50 × $600 ÷ 12) = $12,500 MRR.1Source 1 · Stripe DocsBilling analytics: metric definitions (MRR)docs.stripe.com
Worked example: an MRR bridge
| Movement | Amount |
|---|---|
| Starting MRR (1 March) | $40,000 |
| + New | $3,200 |
| + Expansion | $1,500 |
| + Reactivation | $300 |
| − Contraction | −$600 |
| − Churn | −$1,400 |
| Ending MRR (31 March) | $43,000 |
The same $3,000 of net new MRR could come from strong acquisition masking a churn problem, or from a healthy base expanding on its own. David Skok makes this split the core of SaaS reporting: new, expansion and churned MRR summed into net MRR bookings.2Source 2 · David Skok, For EntrepreneursSaaS Metrics 2.0 – A Guide to Measuring and Improving What Mattersforentrepreneurs.com Expansion that outruns churn is “negative churn,” the engine behind a net revenue retention above 100%.
Common MRR mistakes
- Booking an annual invoice as one month of MRR. A $12,000 annual payment is $1,000 of MRR, not $12,000.
- Counting free trials. Trials and free plans are not recurring revenue until they convert.
- Changing the discount rule mid-year. Stripe lets you choose whether recurring and one-time discounts reduce MRR;1Source 1 · Stripe DocsBilling analytics: metric definitions (MRR)docs.stripe.com whichever you pick, apply it to history too.
- Netting movements per customer per day in some months and per month in others, which changes how much expansion and contraction you report.
How to track MRR in Kimo
Connect Stripe or Paddle and Kimo builds a subscription-movements model with one row per customer per month. MRR, net new MRR and each movement become measures you can chart in the revenue view, alert on in Alerts, or ask about in plain English with Ask Kimo. The SaaS metrics template includes the bridge above out of the box.
Frequently asked questions
Is MRR the same as monthly revenue?
How do you convert MRR to ARR?
Should usage-based revenue be in MRR?
Sources
2 references- Billing analytics: metric definitions (MRR) (opens in a new tab)Stripe Docsdocs.stripe.com
MRR definition, exclusions, worked example, discount settings and MRR movement categories.
- SaaS Metrics 2.0 – A Guide to Measuring and Improving What Matters (opens in a new tab)David Skok, For Entrepreneursforentrepreneurs.com
New, expansion and churned MRR; negative churn.
External sources were accessed at the time of writing. Kimo product details, customers and figures in examples are illustrative unless a source is cited.
