MRR
Monthly Recurring Revenue — the predictable revenue a subscription business expects to receive each month, used to track growth and forecast cash flow.
Example
“The startup's MRR grew from $50,000 to $200,000 in six months, demonstrating strong product-market fit.”
Memory Tip
MRR = predictable MONTHLY revenue. Multiply by 12 to get ARR.
Why It Matters
MRR helps subscription business owners and investors understand the true financial health of a company by showing predictable income that can be counted on each month. This metric directly impacts how much cash a business has available for operations, growth investments, and whether it can sustain itself long-term.
Common Misconception
Many people think MRR is the same as total revenue, but it only counts the recurring portion from active subscriptions and excludes one-time purchases, setup fees, or non-subscription income. This means a business with high one-time sales could have impressive total revenue but low MRR if customers do not stay subscribed.
In Practice
A software company with 500 customers paying 50 dollars per month would have an MRR of 25,000 dollars. If they add 50 new customers the next month while keeping existing ones, their MRR grows to 27,500 dollars, providing a clear metric to track if their growth strategy is working and how much revenue they can reliably expect.
Etymology
Acronym for Monthly Recurring Revenue. MONTHLY (each month) RECURRING (repeating) REVENUE.
Common Misspellings
Small business accounting made simple
Related Terms
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See Also
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