What is Monthly Recurring Revenue (MRR)? A Guide for SaaS Finance Teams

Monthly Recurring Revenue (MRR) is a foundational SaaS metric that captures the predictable, recurring revenue a business expects to generate each month. For SaaS companies with subscription-based pricing models, MRR is not just a metric—it’s a window into growth, forecasting, and financial health.

In this guide, we’ll break down what MRR is, why it matters, how to calculate it, and how TrueRev helps modern finance teams automate MRR tracking and reporting for greater accuracy and insight.

What is MRR?

Monthly Recurring Revenue (MRR) refers to the total predictable revenue a SaaS business expects from subscriptions in a given month. Unlike one-time payments or variable service charges, MRR reflects committed revenue that recurs on a monthly basis.

For example, if you have 10 customers paying $1,000 per month, your MRR is $10,000.

MRR helps companies:

• Understand revenue performance at a glance
• Forecast future cash flow
• Measure the health and growth of their subscription business

Why MRR Matters to SaaS Companies

For early-stage startups and scaling SaaS companies alike, MRR offers a clear picture of recurring revenue performance and is essential for:

• Revenue forecasting
• Investor reporting
• Performance benchmarking
• Churn and retention analysis

MRR is especially important for finance teams seeking to move away from static spreadsheets toward real-time metrics that drive decision-making.

How to Calculate MRR

The basic formula for calculating MRR is:

MRR = Number of Customers × Average Revenue Per Account (ARPA)

Example:

If you have 50 customers paying $200/month:

MRR = 50 × $200 = $10,000

However, most SaaS businesses require more granular visibility, especially those with multiple plans, annual contracts, upsells, or varying billing cadences.

TrueRev helps streamline these calculations with automatic MRR tracking that accounts for:

• New MRR (from new customers)
• Expansion MRR (from upgrades, add-ons)
• Contraction MRR (from downgrades)
• Churned MRR (from cancellations)

This gives you a clear, audit-ready breakdown of net new MRR growth.

Types of MRR Metrics

Here’s a breakdown of the key MRR sub-metrics that finance leaders track:

• New MRR - Revenue from new customers acquired in the month
• Expansion MRR - Revenue from upgrades or add-ons by existing customers
• Contraction MRR - Revenue lost due to downgrades
• Churned MRR - Revenue lost from canceled subscriptions

These components help finance teams measure not just top-line growth, but the quality of that growth.

Annual Contracts vs. Monthly Contracts

Even if you sell annual contracts, you can still calculate MRR by normalizing annual subscription values.

For example:

• $12,000 annual contract = $1,000 MRR

With TrueRev, your annual, quarterly, or multi-year contracts are automatically normalized and mapped to monthly values, removing the guesswork and manual work often found in spreadsheets.

Common MRR Mistakes to Avoid

While MRR seems straightforward, SaaS teams often miscalculate it due to:

• Including non-recurring revenue (e.g., implementation fees, one-time services)
• Improper treatment of discounts
• Failing to adjust for churn or downgrades
• Using booked revenue instead of recognized revenue

TrueRev ensures your MRR data is clean, consistent, and aligned with your accounting logic. Our system integrates directly with your contracts and invoicing workflows to ensure real-time, accurate MRR data—without requiring hours of manual spreadsheet updates.

MRR vs. ARR: What’s the Difference?

While MRR measures recurring revenue monthly, ARR (Annual Recurring Revenue) captures the yearly equivalent.

ARR = MRR × 12

Both metrics are useful:

• MRR is better for short-term growth insights
• ARR is useful for annual budgeting and valuation

TrueRev automatically tracks both, offering you a unified dashboard to toggle between MRR and ARR views based on the audience—be it your CFO, board, or investors.

How TrueRev Helps You Track and Grow MRR

Traditional MRR tracking often involves manual data entry, Excel workarounds, and delayed insights.

TrueRev changes that by:

• Automating MRR calculations from your billing and contract data
• Providing visual MRR waterfalls and growth analysis
• Highlighting churn and expansion trends
• Supporting complex billing cadences and multi-year contracts

Whether you’re managing deferred revenue, ARR growth, or cash flow planning, MRR is the heartbeat of your SaaS business—and TrueRev is your command center.