Product metrics and goals
Monthly recurring revenue (MRR)
Also called MRR, ARR, Annual recurring revenue
The predictable subscription revenue a business earns each month. Annual recurring revenue (ARR) is the same figure for a year.
How it's worked out
MRR at the start + new + upgrades − downgrades − cancellations. ARR = MRR × 12
MRR counts only revenue that repeats: one-off fees and services stay out. Breaking its change into new, expansion, contraction and churn shows where growth comes from.
Annual plans are counted as one twelfth of their value each month.
In practice
Starting at $120,000, a month with $9,600 new, $2,400 upgrades, $500 downgrades and $1,000 cancellations ends at $130,500.
Common mistake
Counting a whole annual payment as one month's MRR, which makes the month look like a spike and the rest of the year look flat.